Business EconomyPosted at: Jul 9 2025 7:21PM


Hospitality industry in Maha seeks govt's intervention to roll back unprecedented taxes

Mumbai, July 9 (UNI) The hospitality industry in Maharashtra which is being pushed to the brink by soaring taxes and relentless levies, endangering both the sector's future and the livelihoods of millions, today demanded government's intervention.
In less than a year’s time span, the industry has faced back-to-back financial shocks. Value Added Tax (VAT) on liquor has been increased from five percent to 10 percent. This was followed by a 15 percent hike in licence fees for the financial year 2025–26.
Now, the State has hiked excise duty by a whopping 60 percent. Taken together, these triple hard blows make the business unsustainable in light of the fact that the industry is still reeling from the economic aftershocks of the COVID-19 pandemic.
Describing it as nothing short of a “tsunami of unjust levies”, Indian Hotel and Restaurant Association (AHAR) warned that the recent policy decisions by the state government are pushing the industry towards collapse, jeopardising both livelihoods and Maharashtra’s aspirations of becoming a global tourism hub.
With rising costs passed on to consumers, the affordability of services in the sector is now under threat, further reducing demand and deepening the crisis.
Sudhakar Shetty, President, AHAR, said “This is not just an economic blow; it is a death blow to an industry that contributes significantly to employment and state taxes. These draconian hikes are the final nail in the coffin. Our members are devastated and staring at a bleak future. From Excise renewal fees hike to an unprecedented hike in VAT and Excise Duty, our survival itself has become a question mark. We appeal to the government to engage with the industry and initiate urgent steps to rollback the tax hikes.”
AHAR pointed out these unjust tax hikes will have far-reaching consequences. The hospitality industry in Maharashtra comprises over 19,000 legal permit rooms and lounge bars, with the number growing at an annual rate of eight percent. It directly employs more than four lakh individuals and supports around 48,000 vendors.
Additionally, approximately 18 lakh people are indirectly dependent on this sector for their livelihoods. Tax evasion and corruption are bound to rise as liquor from neighbouring states will make its way into the state through illegal channels. Burdening such a large ecosystem with excessive taxation will have a cascading impact—not only on businesses but on employment, ancillary industries, and consumer sentiment as well.
The Association expressed grave concern that these unjust policies are being implemented at a time when the Prime Minister’s Office, in collaboration with the World Bank, has laid out a vision to position Mumbai as the top tourist destination in India. However, these tax hikes will achieve the opposite effect. Tourists—both domestic and international—will be driven to more affordable states, resulting in a decline in footfalls, business activity, and ultimately lower state revenues.
AHAR emphasised that all its members have expressed strong displeasure over the government’s apathy. Many fear they will not be able to continue operations under such pressure. The Association urged the government to immediately reconsider these policies and engage in dialogue with the industry before implementing any further changes.
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