100% excise licence fee hike jolts liquor industry
The government must immediately withdraw this exorbitant increase in licence renewal fees
– PC Rao, President, Bangalore Hotel Association
licence renewal fee
In a major blow to the liquor industry, the Karnataka government has sharply increased the excise licence renewal fees by up to 100%, aiming to boost revenue collection to fund its flagship guarantee schemes. The revised rates will come into effect from July 1, coinciding with the start of the excise year in the state.Karnataka's Excise Department, which is the second-largest contributor to the state's revenue, expects to generate an additional Rs 500 to Rs 600 crore annually through this hike. The Finance Department has issued a formal order notifying the fee revision across various licence categories, both in urban and rural areas. For instance, a licence that previously cost Rs 2 lakh will now require Rs 4 lakh, and those at Rs 4 lakh have been revised to Rs 8 lakh, marking a significant increase across the board.This is the first major fee hike since 2016, although the government had previously floated the idea several times. It was repeatedly deferred due to strong opposition from liquor associations. However, the current fiscal push has overridden such concerns, triggering anxiety among liquor vendors and bar owners.Sources said that the revised excise licence fee structure has seen steep hikes across all major categories. For instance, the CL-9 licence for bars and restaurants has increased from Rs 8.62 lakh to Rs 17.25 lakh, marking a hike of Rs 8.63 lakh. Similarly, the CL-7 boarding licence now costs Rs 19.55 lakh, up from Rs 9.75 lakh, reflecting a rise of Rs 9.8 lakh. The CL-5 retail outlet licence fee has doubled from Rs 11.5 lakh to Rs 23 lakh.This hike impacts all 13,567 excise licences currently issued in Karnataka, which includes 3,999 liquor retail outlets, 3,642 CL-9 bar and restaurant licences, 3,030 CL-7 boarding licences, and 303 CL-4 club licences. In addition to these, distilleries, breweries, and godowns have also seen licence fee hikes exceeding 100%. The brewery licence fee has gone up from Rs 27 lakh to Rs 34 lakh, while the fee for godowns has doubled from Rs 45 lakh to Rs 90 lakh, significantly increasing the financial burden on the liquor industry across the state.In urban municipal zones with populations over 20 lakh, thehas increased to Rs 12 lakh, and in other municipal areas, it has gone up to Rs 10 lakh. Smaller towns and panchayat areas will now pay Rs 8 lakh.The hike comes at a time when liquor sales are already slowing due to increased taxes on beer and spirits earlier this year. Industry representatives have expressed alarm, calling the move a 'major financial blow.' 'The government must immediately withdraw this exorbitant increase in licence renewal fees,' demanded PC Rao, President of the Bangalore Hotel Association. As Karnataka targets Rs 40,000 crore in excise revenue for 2025, up from Rs 36,500 crore last year, the burden on the liquor industry is set to intensify.
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