Maharashtra govt hikes VAT, liquor to cost more in hotels

The liquors served in hotels, bars, lounges and clubs will be costlier starting November 1 in Maharashtra as the state government has decided to increase the Value Added Tax (VAT) by 5%. The finance department has issued a notification in this regard which states that the new rate of VAT will be 10% instead of earlier 5% for permit room liquor services.

The state government is also contemplating bringing in a new excise policy wherein the pricing is expected to be linked to the alcohol content of the beverages. Also, the government is contemplating allowing sale of bottled liquors in bars and permit rooms. While the decision to link pricing to alcohol content might render beers cheaper, the government is looking at it as a means to boost up revenue, officials in the excise department said. However, the timeline or other details of the proposed policy are still being deliberated, the officials said.

Sukesh shetty, president of AHAR, an association of over 15000 premium hotels, bars and restaurants across MMR, said "The hike is not fair on restaurants as there is a clear discrimination on wineshop sales and on-the-premise-consumption. This will definitely affect the sales in our industry thereby directly affecting the employment, compared to retail sales. Restaurant industry employs 6 to 8 times more people per outlet than the retail industry," said. Hoteliers say the increase of excise licenses fee recently by govt has already added the burden eventually making the liquor costlier for consumers. When states are competing to get maximum revenue and tourists, it will jolt our policy, they added. However, the rise will not affect over-the-counter sales at wineshops.