In a significant move, Karnataka Chief Minister Siddaramaiah is considering boosting the revenue target for the Excise Department in the upcoming budget. The department’s current fiscal target of Rs 40,000 crore could potentially be raised to around Rs 45,000 crore for FY 2026-27.
The Excise Department’s optimism stems from its expectation of surpassing the previous fiscal’s target by a substantial margin. As of March 2nd, the department had collected approximately Rs 36,500 crore, with an aim to mop up an additional Rs 4,000 to Rs 5,000 crore by the end of this month.
Contrary to assumptions that heightened revenue targets indicate increased alcohol consumption, sources reveal a slowdown in alcohol consumption in Karnataka over the past couple of years. Last year, the CM raised the Additional Excise Duty (AED) on the first four slabs of Indian Made Liquor (IML), which account for 80-85% of the state’s total excise revenue. This increase in AED and beer taxes may have impacted alcohol consumption, but has bolstered state revenue.
Alcohol for human consumption remains exempt from Goods and Services Tax (GST), allowing states to levy their own excise duty and Value Added Tax (VAT) on it. This fiscal autonomy could explain the continued taxation of alcohol, including beer, in Karnataka, with annual excise revenue targets experiencing substantial increases over the years. In 2016, the revenue target for excise was set at Rs 16,500 crore. If the revised target for 2026-27 is set at Rs 45,000 crore, it would represent a 150% increase since 2016.
