The Karnataka government has reverted from its earlier decision to double liquor licence renewal fees from one year to five years in response to strong resistance from liquor sellers and craft alcohol producers to the 100 percent increase they proposed on May 15. The government has decided on an increase of 50 percent, returning the validity of excise licences back to five years, which has been a long-time demand from the liquor industry.
The government anticipated the initial proposal would generate approximately Rs 600-700 crore in lost revenue. After numerous appeals from stakeholders, including the Karnataka Liquor Sellers Association, the government took into consideration the possible financial challenges liquor sellers were facing. Liquor sellers have been advocating for fees to increase by 20-25 percent considering the financial challenges they are facing.
Revised Charge By Area
Under the new policy, licensing fees will be different depending on the population of the local population:
Metro cities (population more than 20 lakh): Rs 9 lakh perp annum.
Other metropolitan locations: Rs 7.5 lakh.
Municipal corporations: Rs 6.75 lakh.
Municipalities, towns and panchayats: Rs 6 lakh.
Other areas: Determined based on local demographic data.
This is the first fee revision on excise licenses since 2016. The government had proposed increases at least a few times over the last nine years, and due to local push-back by the liquor trade the fee increase was always delayed or denied.
Beginning July 1, the revised excise structure will be applicable to more than 13000 license holders throughout Karnataka, as they will all have to renew their licenses according to the new rates.
Karnataka Factoring Annual Excise Fees For Other Licences
In addition to retail licences, the state has also updated annual excise fees for other categories, which are expected to yield an additional Rs 300 crore in revenue:
Distillery & Brewery: Rs 150,000
Craft Brewery: Rs 25,000
Fortified Wine Production: Rs. 25,000
Distillery & Warehouse: Rs 67 lakh
Bar Charter in International Airports: Rs 18.75 lakh
With the amended policy Karnataka is trying to resolve industry challenges and achieve revenue wishes while addressing age-old requests for long-term and stable excise licensing.
