India's Constitution names exactly one product that GST is never allowed to tax.
Not medicine. Not bread. Alcohol.
That one line is why the same bottle can cost ₹100 in Goa and five times as much in Bengaluru, why trucks full of whisky get stopped on the Mumbai-Goa highway, and why your state government is quietly more interested in your weekend than you'd think.
Why is alcohol not under GST?
Because states refused to give it up. When GST came in through the 101st Amendment in 2016, the Constitution's definition of the tax carved out one thing. Article 366(12A) now reads: "'goods and services tax' means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption."
Petrol and diesel sit outside GST too, but only until the GST Council decides otherwise. Alcohol is written out of the definition itself.
So alcohol stayed with the states. Each one sets its own excise duty, VAT and fees. That's the whole story. The rest is consequences.
Why would a state fight that hard for it?
Because it's a lot of money.
According to the RBI's study of state budgets for 2019-20, excise on alcohol made up somewhere between 10 and 15% of most states' own tax revenue. Some lean on it far harder. In RBI data reported by The Federal, liquor brought in 21.8% of Uttar Pradesh's own taxes, 20.6% of Karnataka's and 19.9% of Madhya Pradesh's. Maharashtra's share was lower, at 8.3%.
GST would have meant sharing that with the Centre and losing control of the rate. No state was going to sign up for that.
Why is alcohol so much cheaper in Goa?
Because Goa taxes it less. A lot less.
An industry analysis by ISWAI in September 2023 worked out how much of a spirit's price is tax, state by state:
- Goa: 49%
- Delhi: 62%
- Uttar Pradesh: 66%
- Telangana: 68%
- Rajasthan: 69%
- Maharashtra: 71%
- Karnataka: 83%
On those numbers, something that costs ₹100 in Goa can cost up to ₹513 in Karnataka. That gap is why Goa liquor keeps turning up in trucks, buses and railway attendants' bags.
What happened to liquor prices in Maharashtra in 2025?
They went up. A lot.
On 11 June 2025, Maharashtra raised the excise duty on Indian-made foreign liquor from three times to four and a half times the manufacturing cost. A 180 ml bottle that sold for ₹110 to 115 went to about ₹205. A premium one went from ₹210 to ₹360.
The state expected about ₹14,000 crore extra a year, and reports linked the hike to the cost of the Ladki Bahin scheme, which pays eligible women ₹1,500 a month.
The same decision did two odd things. It spared beer and wine entirely, and it created a brand-new category called Maharashtra-Made Liquor, priced at ₹148 for 180 ml.
Is it the same everywhere?
Nobody's standing still. Karnataka added a 5% additional excise duty on beer and cheaper liquor in May 2025, its second beer hike in about four months. Delhi is working on a new excise policy for 2026-27 with a revenue target of ₹7,200 crore.
Liquor tax is the one lever a state can pull on its own, so it gets pulled.
What about the alcohol used to make alcohol?
That was its own argument for years. Extra neutral alcohol, the base spirit most Indian liquor is made from, sat in a grey zone: was it GST's to tax, or the states'? The GST Council recommended keeping it with the states in October 2023, and the law was changed so that from 1 November 2024, alcohol meant for making drinks is outside GST too.
And a soft drink?
Here's the part that made us laugh, a bit grimly.
Alcohol is written out of GST entirely. Fizzy soft drinks, meanwhile, sit in its highest slab, 40%. Carbonated drinks like ours get taxed like a luxury, and whisky gets taxed by a completely different system.
Not a complaint. Just a very Indian sentence.
Next in Rules Nobody Chose: India's dry states, and what a party looks like there.
Get your founder code and you'll hear first when Batch 001 is ready.
Sources
- Constitution of India, Article 366(12A).
- Shankar IAS Parliament, summarising RBI's State Finances study for 2019-20; The Federal, on RBI state excise data.
- Deccan Herald, "Karnataka serves most expensive alcohol in country, Goa cheapest" (September 2023).
- Business Standard, on Maharashtra's June 2025 excise hike and wine and beer being spared.
- Deccan Herald, on Karnataka's May 2025 beer duty.
- The Week, on Delhi's upcoming excise policy (September 2026).
- TaxGuru, on GST and extra neutral alcohol.
General information, checked in September 2026. Not tax or legal advice.
