India's First Wine, Food and Hospitality Website, INDIAN WINE ACADEMY, Specialists in Food & Wine Programmes. Food Importers in Ten Cities Across India. Publishers of delWine, India’s First Wine.
Skip Navigation Links
About Us
Indian Market
Wine & Health
Wine Events
Retail News
Contact Us
Skip Navigation Links
Wine Tourism
Book Review
Photo Gallery
Readers' Comments
Video Wall
Media Partners
Ask Wineguyindia
Wine & Food
Wine Guru
Gerry Dawes
Harvest Reports
Mumbai Reports
Advertise With Us
US Report on Indian Market Released
Top Ten Importers List 2015-16
On Facebook
On Twitter
Delhi Wine Club
Budget Disappoints Hotel Industry

Posted: Wednesday, 02 March 2011 10:39

Budget Disappoints Hotel Industry

Mar 2: Although wine taxes have been left untouched as expected, the Budget proposal made by the Finance Minister Pranab Mukherjee on Feb 28 will result in higher wine prices when ordered in the restaurants and the consumption may also be affected marginally because of the expected reduction in tourist travel due to an additional service tax to be imposed on most hotels.

According to the proposal, hotel accommodation with declared tariff of over Rs 1,000 per day will incur the service tax of 10.3 percent, with an abatement of 50 per cent. This will mean an effective burden of 5 per cent of the amount charged. Additionally, air-conditioned restaurants with license to serve liquor will now have to pay the service tax with an abatement of 70 per cent.  The effective burden will be 3 per cent of the bill. 

Abatement also implies that the government may gradually increase the duties to the announced levels of 10.3 per cent by withdrawing the initial current reduction of 50 per cent and 70 percent respectively, in the future years.

The reaction from the industry has been negative on the expected lines. Vivek Nair, Chairperson, World Tourism and Travel Council India Initiative (WTTCII) and Vice Chairman and Managing Director of Hotel Leela Venture Limited said, “The proposal in Budget to introduce Service Tax would indeed be a retrograde step and would keep foreign tourists away from India, as it is, the state governments has already levied a luxury tax on room charges, which is as high as 12.5 per cent in states like Kerala and Goa.”

He further added that ‘the proposal to impose the Service Tax on room charges would amount to a multiplicity of taxes on the same base amount. Thus, in Kerala and Goa, the total amount of tax on the room charges would amount to 17.5 per cent which, in comparison with other competing tourism destinations like Singapore, Malaysia and Indonesia, which levy only three per cent, amounts to nearly six times the tax.’

Mumbaikars are already paying luxury tax and value-added tax (VAT) and feel the  additional tax will hit their business. “The government is leaving us no room to survive in the business. Already patrons complain of a high VAT on their bills. Now with the service tax we will soon see a drop in business," said Kamlesh Barot, president, Hotel and Restaurant Association Western India.  Mumbai charges 10 per cent luxury tax.

There is already a VAT of 20-25 per cent on wine and liquor in India. The service tax is going to further inhibit ordering of wine in the restaurants as almost all of them are air-conditioned and will fall under the additional tax net.

Nair has appealed to the Finance Minister to withdraw the proposal in the interest of the growth of the tourism industry, which has set a target of 10 million foreign tourists by 2020. Currently India receives only 6 million tourists who contribute significantly to the wine consumption-especially the Indian wines as they are cheaper and the ex-pats who are habitual consumers of wine with food like to taste the Indian produce with their food.

The government proposes to collect a sum of Rs.8 billion from the service tax on hotels and Rs.5 billion from the air-conditioned restaurants serving liquor. The total of Rs.13 billion ($300 million) is about 30% of the total additional revenue of Rs.44 billion expected from the new service taxes to be added during the coming fiscal year 2011-12.




how can guest pay and service on room tariff. two taxs at a same time

Posted @ April 21, 2011 13:20


Subhash Arora Says:

Actually there are many complex reasons, Bahman. Wine was not on our country's radar till a couple of decades ago. Liwuor has been always prevalent. Alcohol consumption has been considered a social ill due to a section of society doing the harakiri by drinking cheap alcohol to get drunk and in the process creating economic calamities on the family. Our Constitution has been explicitly against alcohol promotion. Unfortunately,  the lawmakers have lumped wine with the whole spectrum of alcohol and liquor, and have still not appreciated the health benefits of wine and the need to direct the liquor drinkers to this beverage. Obviously, the liquor producers are not keen for the wine to substitute their highly profitable product.
Lets hope things change for the better. But rest assured, the tourists would find some thing palatable at the retail shops or the hotel- at least some interesting Indian wines. Cheers, Subhash Arora

Posted @ March 08, 2011 15:16


Bahman Marzbani Says:

Wow!!!! Matybe that is just what the tourists excuse to drop India from their tour itinerary. Is it possible that those who levy taxes on wines and liquors do not consume wines, etc. Maybe that could be another reason why NO wine or liqour is served at Govt. official functions in India. There is a need for India to re-inherit its wine culture. maybe wine should be classified as a health drink rather than an alcoholic drink.

Posted @ March 08, 2011 15:13


Want to Comment ?
Please enter your comments in the space provided below. If there is a problem, please write directly to Thank you.

Generate a new image

Type letters from the image:

Please note that it may take some time to get your comment published...Editor

Wine In India, Indian Wine, International Wine, Asian Wine Academy, Beer, Champagne, World Wine Academy, World Wine, World Wines, Retail, Hotel


Copyright©indianwineacademy, 2003-2020 |All Rights Reserved
Developed & Designed by Sadilak SoftNet