Maharashtra’s hospitality industry is on the “verge of collapse” due to a “tsunami of unjust levies” imposed by the state government, the Indian Hotel and Restaurant Association (AHAR) declared today. The unprecedented tax hikes threaten to cripple businesses, trigger widespread unemployment, and severely undermine Maharashtra’s tourism ambitions.
In less than a year, the sector has been hit by a relentless barrage of financial shocks. Value Added Tax (VAT) on liquor has doubled from 5% to 10%, followed by a 15% hike in license fees for FY 2025–26. The latest blow is a staggering 60% increase in excise duty. These cumulative hikes render operations unsustainable, especially as the industry continues to reel from the economic aftershocks of the COVID-19 pandemic.
“This is not just an economic blow; it is a death blow to an industry that contributes significantly to employment and state taxes,” stated Sudhakar Shetty, President, AHAR. He added, “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.”
AHAR warned of far-reaching consequences across the state’s vast hospitality ecosystem. Maharashtra’s industry encompasses over 19,000 legal permit rooms and lounge bars, growing at 8% annually. It directly employs more than 4 lakh individuals and supports approximately 48,000 vendors, with an additional 18 lakh people indirectly dependent on the sector.
The Association fears that these excessive taxes will inevitably lead to increased tax evasion and a surge in illegal liquor trade from neighboring states. Such a burden on a large ecosystem will have a cascading negative impact on businesses, employment, ancillary industries, and consumer sentiment.
Furthermore, AHAR expressed grave concern that these policies directly contradict the Prime Minister’s Office’s vision, in collaboration with the World Bank, to establish Mumbai as India’s premier tourist destination. “Instead of becoming a leading travel destination, Mumbai risks losing domestic and international footfall to more affordable states,” AHAR cautioned, predicting a decline in business activity and, ultimately, lower state revenues.
AHAR emphasized the strong displeasure among its members, many of whom fear they cannot continue operations under such immense pressure. The Association urgently called upon the government to reconsider these policies and initiate a constructive dialogue with industry stakeholders before implementing any further changes.
The hospitality industry remains a cornerstone of Maharashtra’s economy, vital for its urban vibrancy and global identity. AHAR stands committed to advocating for its members and ensuring the sector receives the support and respect it deserves.
