Proposed excise licence fee hike cut to 50%: Karnataka govt

Hindustan Times

3 days ago

The state government on Thursday rolled back its decision to double the liquor excise license renewal fees and announced a more moderate 50% hike, which will come into effect from July 1. The move follows strong opposition from liquor sellers and craft alcohol producers, some of whom threatened to shift operations to other states after the May 15 draft proposal mentioned a 100% hike. Excise minister RB Timmapur
'We had to consider everyone's views, so the CM and I agreed to lower the hike to 50%,' said excise minister RB Timmapur. He admitted that while the original proposal aimed to boost state revenue by ₹ 600–700 crore annually, the government opted for a balanced approach. The state also extended the validity of excise licenses from one year to five years — a key demand from the industry.
According to the notification, license fees for hotels and bars in major cities like Bengaluru (with populations above 2 million) were increased to ₹ 2.75 lakh per annum from the earlier ₹ 8.5 lakh. Similarly, renewal fees for retail outlets (CL2), clubs (CL4), and bars and restaurants (CL9) were increased by 50%. Distilleries will now pay ₹ 67.5 lakh annually, up from ₹ 45 lakh, and breweries will see their fees rise from ₹ 27 lakh to ₹ 40.5 lakh, the order stated.
As per the order, the license fees of hotels and bars in metropolitan areas with over 2 million residents will have to pay ₹ 9 lakh, while smaller corporations and municipalities will pay between ₹ 6 lakh and ₹ 7.5 lakh. Additional excise categories, including distilleries, warehouses, fortified wine producers, and craft breweries, also face revised annual fees. Craft breweries, for instance, will now pay ₹ 25,000, while distilleries with warehouse facilities will pay ₹ 67 lakh.
The revised inspection policy, which has mandated the regulatory checks from an annual to a five-year cycle, was well received by license holders. 'Every year, during the inspections, a few officials tend to demand bribes and an increase in the inspection period is a welcome move as it will bring down corruption,' said Karunakar Hegde, Bengaluru divisional president of the Federation of Wine Merchants Association of Karnataka.
'We would not have been able to run business if the hike was 100%. Though 50% increase will also hit our business, we can somehow manage,' he added.
Prior to the rollback, Huli Distillery, Mysuru-based craft rum producer, Aruna Urs said that he never received a response after writing to the state government over a month ago, asking it to reconsider the proposed fee hike. 'For one year of licence fees in Karnataka, I can operate for nearly five years in Goa,' he said, accusing the state of stifling small businesses. Urs added that his company currently pays ₹ 63.1 lakh in fees, which will now increase to ₹ 90 lakh under the new rates. 'This is pure extortion,' he said.
The fee hike and the lack of government response prompted offers from neighbouring states. Andhra Pradesh minister Nara Lokesh reportedly reached out to Urs, offering a 'tailor-made excise policy' and inviting the distillery to relocate. Urs posted on social media tagging Congress leaders, saying, 'Is this Congress' idea of ease of doing business...?'
Industry experts also pointed out the frequency of tax increases in Karnataka. 'In the past two years, beer taxes have gone up four times—three times through additional excise duty and once through a general hike,' said the director general of the Brewers Association of India. 'This has pushed the price of a beer bottle from about ₹ 160 to ₹ 200,' he said.
Stakeholders continue to push for additional relief. 'The government has accepted our plea to extend the license validity to five years, which is a welcome step,' said B Govindaraja Hegde, general secretary of the Karnataka Liquor Sellers' Association. 'But we've also asked for the option to pay the revised fees in installments, and we're hopeful the government will agree to that too,' he added.
HT reached out to leader of Opposition R Ashoka for comment, but did not receive any response.