Pay more for drinks at Mumbai restaurants from April

After the Centre hiked service tax in the Union budget, Maharashtra government has increased the liquor licence fee for permit rooms. Hotels and restaurants will have to pay Rs 5.98 lakh fees annually — Rs 54,000 more than the current fee of Rs 5.44 lakh.

From April, be ready to pay more for your drinks in restaurants.

After the Centre hiked service tax in the Union budget, Maharashtra government has increased the liquor licence fee for permit rooms. Hotels and restaurants will have to pay Rs 5.98 lakh fees annually — Rs 54,000 more than the current fee of Rs 5.44 lakh.

Hoteliers will pass on the burden to customers. Also, the licence fee to serve only beer in restaurants has been increased to Rs 1.65 lakh from Rs 1.50 lakh.

Last year, 90 restaurants in Mumbai shut, citing inability to pay high fees. With the 10% hike in fees this year, hoteliers fear more restaurants will close down.

The hike will bleed the sector which is already facing a tough time, said Hotel and Restaurant Association of Western India (HRAWI).

“We will have to hike the prices of liquor as well as food,” said Gurbaxish Singh Kohli, vice-president, HRAWI.

“Smaller restaurants will have no option but to close down,” said Kohli, also director of Pritam Group of Hotels.

AD Singh, managing director of Olive Bar and Kitchen, said high taxes will discourage people from coming to restaurants. “We will lose revenue. The food business, too, will have to bear the brunt of this,” said Singh.

According to HRAWI, hotels in the state are among the highest taxpayers in the world but face restrictions such as dry days and timings.

Last year, the excise departments hiked the licence fee by a staggering 50% forcing many establishments to close down. The Indian Hotels and Restaurant Association (AHAR) had to arrange soft loans for its members from financial institutions to tide over the crisis.

Excise officials justified the hike, saying money is needed to carry out social schemes. “It is a marginal hike and we need money for social schemes. There has been a hike in liquor consumption in recent years,” said the official, requesting anonymity.

Savio D’Sa, partner, 4play Bar & Lounge at Khar, said the hike will worsen the slowdown in the sector. “People are preferring house parties and this has caused us a loss in business,” said D’Sa.

Prashant Chadha of Three Wise Men at Santacruz said the hoteliers have no choice but to go ahead with the hike. “We have to comply with the hike,” he said.