Liquor May Get Costlier at Army Canteens in Karnataka as Excise Department Plans Duty Hike

This potential price hike is part of the department’s broader effort to boost revenue collection and achieve its annual fiscal targets | Image used for representation purpose only.

BENGALURU: Liquor prices at army-run canteens in Karnataka may soon see an upward revision, with the state Excise Department preparing a proposal to increase the Additional Excise Duty (AED) on Indian Made Liquor (IML) and beer supplied to defence establishments.

This potential price hike is part of the department’s broader effort to boost revenue collection and achieve its annual fiscal targets. According to a report published in Bangalore Mirror, a formal proposal is currently in the works, and officials have confirmed that the revision would specifically target the AED rates that are presently minimal for alcohol distributed through military canteens.

In Karnataka, two military canteens operated by the Ministry of Defence’s Canteen Stores Department (CSD) cater to serving and retired armed forces personnel and their families. These canteens offer liquor and essential commodities at heavily discounted rates, primarily due to generous excise duty exemptions. On average, liquor sold at CSD outlets is 30% to 40% cheaper than in regular retail stores.

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Official records indicate that during the 2023–24 financial year, approximately 153.87 lakh litres of Indian Made Liquor and 10.84 lakh litres of beer were sold through these military canteens. The department anticipates a marginal increase in these figures in the ongoing fiscal. However, officials argue that the current AED structure fails to reflect the expanding scale of liquor distribution through the CSD network.

At present, the AED imposed on liquor sold in military canteens ranges from ₹1 to ₹3.70 per litre for IML and up to ₹2 per litre for beer. By contrast, alcohol sold in the open market is taxed far more heavily — IML attracts AED between ₹297 and ₹3,000 per litre depending on the brand and alcohol content, while beer is taxed at nearly 200% of its production value.

According to excise officials, Karnataka’s AED policy for military canteens remains far more lenient than that of neighbouring states such as Andhra Pradesh, Telangana, Maharashtra, Kerala, and Goa. These states levy AEDs on military liquor supplies ranging from 20% to 70% of the rates applicable in the retail market. Karnataka is now looking to align itself with this model, although it plans to keep the revised tax rates lower than those for civilian consumption.

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Excise Minister R.B. Thimmapur has reportedly directed officials to examine the taxation structures of nearby states and draft a detailed plan outlining the proposed changes. The department is also evaluating the potential revenue increase such a measure could generate for the state.

Beyond revenue considerations, the planned revision also seeks to curb instances of misuse. Authorities have flagged several cases of subsidised liquor being siphoned off from military canteens—particularly those under General Forces (GENF)—and illegally sold to civilians. Given the high sales volumes, officials believe an increase in AED could help reduce such leakages.

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