We use state-of-the-art GW-Bethe Salpeter Equation (BSE) formalism to study electronic structure and optical properties of oxygen vacancies ($F$-centers) in α-alumina. Density functional theory (DFT) + GW formalism has been employed to compute the charge transition levels (CTLs) for oxygen vacancies. We propose a reformulation of the DFT+GW approach to calculate these CTLs. Our new approach allows for transparent application of electrostatic corrections required in finite supercell calculations using periodic boundary conditions. We find that $F$-centers in this material introduce deep donor levels, (+2/+1) at 2.4 eV and a (+1/0) level at 3.9 eV above the valence band maximum. We also study $F$-center absorption and emission processes using constrained–DFT and BSE. Our calculated absorption and emission energies are in excellent agreement with experiments and provide an unambiguous interpretation of the same.