Liquor served in bars, lounges, and cafes will get costlier in Maharashtra as the state government has decided to increase the Value Added Tax (VAT) by 5 per cent from November 1 for permit room liquor services. However, the rise in tax rate will not affect over-the-counter sales at wine shops.
As per a report in Times of India, a government resolution regarding the same was issued on Friday. After this, the total VAT rate on permit room liquors will be a total of 10 per cent.
Notably, there will be no rise for liquor services in star hotels as they are already paying higher VAT. Currently, the VAT imposed on the liquor services at star hotels stands at 20 per cent.
Talking about the rise in the VAT rate, hoteliers were quoted as saying in the report that the surge in license fees recently by the government has already added to their burden as it made the liquor costlier for consumers.
“The increase is quite surprising as the same in the backdrop of the increase in the yearly excise fees will mean that prices in restaurants, and bars will go up. We are in an age where states are competing with each realising the power of tourism in driving economies resulting in a reduction of excise duties. Goa, Chandigarh and Haryana are a few such examples,” the news publication quoted Pradeep Shetty, president of hotels and restaurants of western India (HRAWI), as saying.
TOI quoted some sources within the industry as saying that the decision to increase VAT is likely to drive customers toward more affordable alternatives like off-premise consumption, such as on building terraces, parks, beaches or parked vehicles.
The shift in the consumer pattern will not only result in loss of business for the bars and restaurants but also can pose serious challenges to law and order situations as well as drink and drive.
Apart from this, the state government is also considering implementing a new excise policy that links pricing to the alcohol content of beverages and permits the sale of bottled liquors in bars and permit rooms, media reports suggested.
Liquor Prices Rise In Gurugram
Last month, it was reported that liquor prices in Gurugram have risen after shortages of popular brands in Delhi. The shortage of liquor in Delhi was due to the city’s controversial excise policy and the rejection of sale licenses for major companies. And the absence of major brands from Delhi’s liquor market allowed retailers in Gurugram to raise prices.
According to a report by Hindustan Times last month, the liquor vendors had stopped offering discounts and offers as customers in Delhi turned to Gurugram to purchase popular alcohol brands.
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