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PUNJAB State excise policy to hit hospitality industry hard’ VAT Imposed On Liquor In Hotels, Bars

March 25, 2019 06:55 AM


State excise policy to hit hospitality industry hard’
VAT Imposed On Liquor In Hotels, Bars


The sale of liquor in hotels and restaurants in Punjab, which is already on a downfall is expected to see a further hit in the coming financial year owing to the high tax rates and the increased and unchecked car-o-bar — a popular trend in the state. With non favourable excise policies framed in recent years, the hospitality industry has witnessed an annual dip of about 15% in revenue. There are about 2,000 hotels and restaurants which serves liquor across the state.

If numbers shared by Hotel, Restaurant and Resort Association (HRRA), Punjab are to be believed the daily average liquor sale pegged at Rs 50,000 about four years back has come down to about Rs 20,000 per day.

To help improve the falling sales, HRRA had urged the state government to give the hospitality industry a relief by reducing bar license fee and assessment charges per case. The state government has not only increased different charges and fee but also introduced value added tax (VAT) on sale of liquor at bars and hotels in the excise policy for 2019-20. The tax will be charged at the rate of 14.30%. At present, there is no provision of imposing VAT on the sale of liquor at hotels and bars. For the implementation, the department of excise and taxation will initiate action under Punjab VAT Act, 2005. With introduction of VAT, the liquor rates in hotels and restaurants in Punjab will further go up which are already are about 30% higher than rates prevailing in Haryana and Chandigarh.

The government has increased the annual license fee for hotels having 4 start category from Rs 7 lakh to Rs 7.5 lakh and from Rs 3.25 lakh to Rs 3.26 lakh for hotels in municipal corporations. Unlike in other states where hotels purchase liquor from wholesalers, in Punjab they have to buy liquor from retail rates from liquor vends. If government continues to ignore interests of hospitality industry, HRRA, Punjab president Satish Arora fears that businessmen running bars will be left with no other option but to close them. “It’s fast becoming non-viable business in Punjab,” said Arora. He further said that with no checks in place, the popular trend of car-o-bar is killing their business. Even as consuming liquor in public places is illegal, people consuming liquor inside their cars near eateries and liquor vends is a common scene across the state.

Harman Sidhu, Chandigarh-based Road safety activist who has been fighting for regulirisation of sale of liquor in the region, said that the state government is least interested in tackling the menace. “They are just interested in revenue,” said Sidhu.


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