Karnataka has made history as the first state in India to adopt an Alcohol-in-Beverage (AIB)-based excise duty structure, which officially came into effect on May 11, 2026. This innovative approach aims to rationalize liquor pricing, making alcoholic beverages more affordable for consumers and aligning prices with neighboring states such as Tamil Nadu and Andhra Pradesh. Chief Minister Siddaramaiah announced this reform in the 2026-27 Budget, emphasizing that the AIB structure is recognized globally as the gold standard for alcohol taxation, directly linking excise duty to the alcohol content of beverages.

Under the new system, the previous bulk litre-based pricing model has been replaced with a structure that considers the percentage of alcohol in beverages. This change is expected to lead to significant price reductions, with mild and lager beers dropping by 20-25% and premium Scotch whiskey also seeing a 20% decrease in price. However, prices for the first five slabs of Indian Made Liquor (IML) will increase by the same percentage. The Karnataka State Excise Department will publish revised Maximum Retail Prices (MRP) for liquor and beer brands in leading newspapers, ensuring transparency in the new pricing structure.