'Tsunami of unjust levies': Hospitality industry raise voice against increased taxation

Mumbai: Accusing the Maharashtra government of imposing “tsunami of unjust levies”, the Indian Hotel and Restaurant Association (AHAR) said that they are now struggling to survive and are contemplating going on a token strike.

Maharashtra has 19,000 legal permit rooms and lounge bars, with the number growing at an annual rate of 8 per cent. It directly employs more than 4 lakh individuals and supports around 48,000 vendors. Additionally, approximately 18 lakh people are indirectly dependent on this sector for their livelihoods.

Roughly 50 per cent of the hotel owners and workers hail from Karnataka.

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 5 per cent to 10 per cent.

This was followed by a 15 per cent hike in license fees for the financial year 2025–26. Now the state has hiked excise duty by a whopping 60 per cent.

“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,” AHAR President Sudhakar Shetty said on Wednesday.

Many fear they will not be able to continue operations under such pressure and tax regime - as they are operating with just five per cent margins.

“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 roll back the tax hikes,” said Shetty.

According to him, they have already made representations to the bureaucracy and now sought audience of Maharashtra Chief Minister Devendra Fadnavis and Deputy Chief Ministers Eknath Shinde, who is the Urban Development Minister and Ajit Pawar, who is the Finance and Planning Minister.

Shetty was accompanied by AHAR team including Advisor Sukesh Shetty, General Secretary Vijay Shetty, Treasurer Sunil Shetty and Vice President (Zone VII) Santosh Shetty.

AHAR warned that the recent policy decisions by the state government are pushing the industry towards collapse, jeopardizing 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,” said Shetty.

“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 AHAR President pointed out.

Hoteliers 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.

“The hospitality industry is a cornerstone of Maharashtra’s economy and a critical driver of its urban vibrancy and global identity,” they said.