Hike in licence fee, VAT to hit hospitality sector, say hoteliers

LUDHIANA: Opposing the new excise policy, the hotel and restaurant association of Punjab on Friday demanded relaxation in the licence fee and VAT for hotels and bars, saying that the hospitality sector suffered huge losses during the pandemic and the hike in fee would take a further toll on the business.

During a meeting of the association held here, the members stated that they will also meet chief minister Bhagwant Mann over the issue in Chandigarh on Monday. The Punjab government on Wednesday announced the new excise policy for the current financial year.

“We were expecting relief under the excise policy as the sector has already faced huge losses in the past, but the government has put an additional burden on the sector by increasing the licence fee. This will further affect the business. The government should reduce the licence fee and also bring down VAT to 5 percent,” association president Amarvir Singh said.

The association said that the licence fee for bars has been increased from ₹ 3 lakh to ₹ 5 lakh under the policy. Similarly, the fee for four-star hotels has been increased from ₹ 6 lakh to 10 lakhs and for five-star hotels, it has been increased from ₹ 8 lakh to 15 lakh. Also, 22 percent VAT has been imposed under the new policy and licence fee for marriage palaces and banquet halls has also been increased.

Amarvir stated that the hospitality sector has already suffered a loss of over ₹ 15,000 crore due to the pandemic and many of the bars owners have not got the licence renewed last year. There are around 6,500 hotels, restaurants and bars in the state and around 2,700 associated with bar industry.

They also demanded that the government should also cover taverns (ahata) under the excise policy and fee should also be imposed on them.

Paramjit Singh, an association member, stated that many of the taverns have been constructed better than the bars in the state, but these are not covered under the excise policy. Customers prefer these taverns, leading to losses for the bar owners, he said.