Maharashtra's increased tax on liquor an unwelcome step

In October 2023, the Maharashtra government increased the Value Added Tax (VAT) on liquor served in bars, lounges, clubs, and cafes by 5%, raising it from 5% to 10%. This adjustment did not affect star hotels, where the VAT remained at 20%.

The Hotel and Restaurant Association of Western India (HRAWI) expressed concerns that this tax hike, coupled with a recent increase in excise license fees, would make liquor more expensive, potentially harming the hospitality and tourism sectors. They argued that higher prices could deter patrons and negatively impact employment within the industry.

Despite these concerns, the state's excise revenue for the fiscal year 2023-24 reached a record high of ₹23,250 crore, marking an 8% increase from the previous year. Officials attributed this rise partly to the tax on country liquor, which led some consumers to switch to Indian-made foreign liquor (IMFL).

As of now, the Maharashtra government has not indicated any plans to roll back the increased VAT on liquor. The hospitality industry continues to advocate for reconsideration, citing potential long-term impacts on tourism and local businesses.