As liquor sales remain a major source of revenue, experts note that this boom underscores the financial impact of state-level taxation policies amidst rising manufacturer prices.

Alcohol sales are giving state revenues a dramatic high, with excise duty collections soaring up to 82 per cent in just two months. Uttar Pradesh topped the charts for total revenue collected, while Haryana clocked the highest growth rate.

State excise duty represents the second-largest component of a State’s own tax revenue. This tax is levied by State governments on alcoholic liquors intended for human consumption, as well as on certain narcotic substances.

Maximum growth

Monthly key indicators of 10 key States, compiled by the Comptroller and Auditor General (CAG), showed that Uttar Pradesh earned over ₹10,600 crore in April-May period of FY27, which is nearly 9 per cent higher than corresponding period of FY26.

During the same period, Haryana recorded maximum growth of over 82 per cent with absolute numbers reaching over ₹2300 crore. Karnataka was second in terms of absolute amount and Kerala was number two in percentage growth.

Industry sources attribute this revenue surge to three main factors: a 14 per cent growth in consumption, excise rate hikes by several State governments, and upward revisions in base prices by manufacturers.

Alcohol for human consumption is constitutionally debarred from Goods and Services Tax (GST). States and Union Territories can fix levies on their own. These include State excise duty on manufacturing, VAT (value added tax) on sales and cess.

These levies could be ad valorem (percentage of the base value) or specific (fixed rupees per litre) and States/UTs can change the framework on their own.

For example, Karnataka has become the first State in India to introduce alcohol-in-beverage (AIB)-based excise system, while Kerala has proposed reducing the sales tax on liquor with low-alcohol content.

Excise receipts

According to CAG’s Publication on State Finances 2024-25, State excise duty is a major component of SOTR accounting for 13.50 per cent of SOTR of all States in FY25.

In FY25, Uttar Pradesh registered the highest state excise receipts at ₹52,575 crore, followed by Karnataka at ₹35,784 crore, Maharashtra at ₹25,466 crore, Andhra Pradesh at ₹19,882 crore, West Bengal at ₹19,521 crore, Telangana at ₹18,604 crore, Madhya Pradesh at ₹15,201 crore and Rajasthan at ₹15,104 crore.

In the eight North-Eastern and two Himalayan States, Uttarakhand recorded the highest excise receipts at ₹4,362 crore, while Mizoram reported the lowest at ₹2 crore.

Over the 10-year period from 2015-16 to 2024-25, excise collections of all States taken together increased by 173 per cent. Telangana registered highest growth at 388 per cent in FY 2024-25 over FY 2015-16. West Bengal and Andhra Pradesh also registered substantial growth in excise receipts, at 386 per cent and 353 per cent respectively during the 10-year period.

In Bihar, excise duty collections declined from ₹3,142 crore in FY 2015-16 to ₹30 crore in FY 2016-17 and further to ₹0.41 crore in FY 2024-25 due to total liquor prohibition policy, which came into force in April 2016. Mizoram had experienced significant decline in State excise revenues due to enforcement of Mizoram Liquor (Prohibition) Act.

Published on June 28, 2026