AHAR asks Maharashtra Govt. to roll back tax hikes

High taxes and levies have endangered Maharashtra’s hospitality industry’s future as well as the livelihoods of millions, the Indian Hotel and Restaurant Association (AHAR) said on Wednesday (July 9, 2025).

In less than a year, the industry has faced back-to-back financial shocks which include increase in Value Added Tax (VAT) on liquor from 5% to 10%, 15% hike in license fees for FY26 and surge in excise duty by a whopping 60%. 

AHAR has cautioned that the recent policy decisions by the State government would push the industry towards collapse.

“This is not just an economic blow; it is a death blow to an industry that contributes significantly to employment and state taxes,” Sudhakar Shetty, President, AHAR, said while addressing a press conference.

“These draconian hikes are the final nail in the coffin. Our members are devastated and starring 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,” he said.

“We appeal to the government to engage with the industry and initiate urgent steps to roll back the tax hikes,” he added.

According to AHAR these taxes will have far-reaching consequences as the hospitality industry in Maharashtra has over 19,000 legal permit rooms and lounge bars and the number growing by 8% annually.

While the industry directly employs more than 4 lakh individuals and supports around 48,000 vendors about 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,” AHAR said.

It emphasised that all its members had expressed strong displeasure over the government’s apathy. Many fear they would not be able to continue operations under such pressure, the AHAR president said. 

The Association has urged the government to immediately reconsider these policies and engage in dialogue with the industry before implementing any further changes.