Budget
Karnataka has removed VAT on beer, fenny, liqueur and wine.
Cambridge Brewing Company/Flickr

It’s good news for beer and wine lovers in Karnataka with the drinks to get cheaper.

This after Chief Minister Siddaramaiah announced that Value-Added Tax (VAT) on liquor including beer, fenny, liqueur and wine is removed with effect from the next financial year starting from April 1.

This means customers drinking at a restaurant or a pub don’t have to pay an additional VAT for their alcohol.

Some restauranteurs have welcomed the move despite an increase in additional excise duty for hard liquor.

“The doing away with the VAT is a welcome decision. Then again raising the prices of hard liquor on the other side will lead to the customer paying more,” Ashok Sadwani, a member of Karnataka Pub Owners’ Association said.

However, Ashish Kothare, Managing Committee member of the National Restaurant Association of India, said that though hard liquor like whisky or vodka will become expensive, some restaurants and pubs may not pass on the hike to the customer.

"It is a welcome change that the VAT has been removed because that was a burden straight on to the customers. There will be a slight increase in cost for the customers on the other hand as the additional excise duty has gone up but I don't think the customer will suffer because of this as the market is very price-point sensitive. This extra cost is most likely to be absorbed by the owners," said Ashish.

Indian Manufactured Foreign Liquor (IFML), other than wine and beer, is also likely to become more expensive with Additional Excise Duty being increased for all the 17 price slabs.

Officials of the Karnataka Excise Department said the price of first two slabs (up to Rs 464) will increase by 10%.

The fifth (Rs 565.00-Rs 664.00) and 11th slab (Rs 1165-1264) will see an increase in prices of 6% while the remaining 13 slabs will see the prices to rise by 16%.

The following is the chart of 17 price slabs of liquor in Karnataka.