While presenting the state Budget for 2026, Chief Minister Siddaramaiah proposed replacing the existing taxation framework'where liquor was taxed based on global benchmarks'with a system that taxes beverages according to their actual alcohol content. The transition to the alcohol-in-beverage (AIB) based structure will be implemented in phases over the next three to four years, with the revised framework scheduled to take effect from April 2026.
The government also announced that it will discontinue setting liquor prices, effectively deregulating the pricing system. Under the new policy, manufacturers will be allowed to determine prices based on market competition, marking a significant change from the earlier regime where government approval was required for pricing.
Analysts said the reforms are positive for the sector as the removal of slab-based pricing controls and greater pricing flexibility could improve growth prospects for liquor companies operating in the state.
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