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Hic, hic hurray! Govt reduces VAT on liquor served in bars

It’s double cheers for those who want to enjoy hard drinks sitting in the cozy corners of bars.

india Updated: Feb 20, 2012 01:18 IST
Sanjeev K Ahuja
Sanjeev K Ahuja
Hindustan Times

It’s double cheers for those who want to enjoy hard drinks sitting in the cozy corners of bars.

The state government has reduced the value added tax (VAT) on liquor served in bars from 25% to 15%.

Besides, it has reduced the excise duty on wine and beer, while increasing the duty on the Indian Made Foreign Liquor (IMFL) by merely R3 per bottle.

However, the VAT on liquor sold across counters of roadside vends has been increased.

According to excise and taxation department sources, the move is aimed at curbing alcohol consumption outside eateries and other places. The new rates would be effective from April 1.

At present, many people prefer to sit and drink in ahatas, a place attached to a liquor vend.

They find it a cheaper option than paying 25% VAT along with 1.25% service charge at bars.

The bar owners who have been losing customers to these ahatas, are on the upbeat with the new VAT policy.

“The 10% decrease in VAT would benefit customers as well as restaurants. Now, more customers would be attracted to bars to enjoy drinks in style,” said Vinit Tang, chief operating officer (COO) of Vatika Hospitality, which runs a chain of upscale bars and restaurants such as Fox, Coriander Leaf, 56 and Zing.

The new excise policy also has provisions to promote indigenous wine manufacturing units. The excise duty on wine and beer has been unchanged at R3 per litre for wine and Rs 20 per litre for beer.

The duty on beer had been increased in the last two years.

In order to favour domestic wine manufacturers, the government has slashed the winery licence fee from R1 lakh to R10,000 per annum.

A new licence (L-1W) has been introduced in the excise policy for marketing wine products in the state on payment of R1 lakh annually instead of R6 lakh that the wine manufacturers earlier had to shell out to obtain the L-1B1 licence.

First Published: Feb 20, 2012 01:16 IST