Karnataka Slashes Liquor Licence Fee Hike From 100 to 50%; New Policy Effective from July 1

Bars, wine shops, and distilleries in Karnataka should take note, as the state government has decided to cut the proposed liquor licence fee hike by 50%. Originally, the government had planned to double the licence fee, which was 100%, but after strong pushback from the industry, the hike has now been reduced.

This change will officially take effect from July 1 this year and comes along with another welcome move where the regulatory inspections will now happen once every five years instead of every year.

What Was the Issue?

A few weeks ago, the state government had announced that the annual liquor licence fee would be increased by 100%. Which led to industry representatives reaching out to Chief Minister Siddaramaiah and finance officials, after which the government reduced the fee to ₹11.25 lakh per year.

As per a Times of India report, the change comes after 8 years of no fee revision, and according to Excise Minister R.B. Timmapur, who was quoted by TOI, the revision was needed to increase state revenue but also had to be fair to businesses. "We had to consider everyone's views, so the CM and I agreed to lower the hike to 50%," he said.

While big liquor companies and wine store chains may welcome this rollback, micro-distilleries and smaller liquor businesses say they are still struggling. Even with the reduced hike, wine shop owners in Bengaluru and other parts of Karnataka say they are still feeling the heat. Increased licence fees, along with rising rent, electricity, and salary costs, are still impacting their margins.

Government Will Lose Revenue

While this rollback is great news for liquor businesses, it does come at a cost. The government was expecting to earn around Rs. 600-700 crore more per year with the original hike, as per reports. By slashing the increase, it will now lose out big time. However, officials believe the loss can be offset by reducing the regulatory burden since the licence verification process will now happen once every five years instead of annually. This change is expected to save time and resources for both the government and the business owners.

Excise Minister Timmapur acknowledged that not all demands could be met. "We tried to balance the needs of revenue growth and business support, but not all decisions can make everyone happy," he said.