PUDUCHERRY: Despite the withdrawal of six per cent service tax on liquor served in restaurants, hotels and bars after the implementation of Goods and Services Tax (GST) from July 1, the cost of drinking hasn’t come down in Puducherry as expected, and the overall booze business has been hit by around 25 per cent cut.
Under the new tax regime, drinking is supposed to cost less as liquor doesn’t come under the GST, and the Service Tax has been merged with the new tax. However, restaurants, hotels and bars are still charging the pre-GST rates for liquor. According to hotel owners, the rate of liquor remains the same post-GST. This is because most of the hotels, restaurant and bars have integrated the earlier service tax amount with the menu rates of liquor.
Since MRP doesn’t apply to liquor sold in pegs in hotels, restaurants and bars, the menu rate for pegs of different types of liquor is fixed by the hoteliers themselves. While the hotels charge food items by adding GST on the menu rates, they charge only menu rates for liquor.
However, the price of liquor continues to remain cheaper in Puducherry compared to many others States in the country because of the government policy of keeping the excise duty and additional excise duty (charged in place of Sales Tax) lower. In the GST regime, people consuming food in a restaurant, hotel or bar will have to pay more than earlier due to the increase in tax to 12-18 per cent (according to the grade of hotel) from the earlier eight per cent.
There was an expectation that footfall of tipplers in bars would increase after July 1, but this didn’t materialise. “Ever since the GST implementation, business has gone down by 25 per cent,” said Ramamurthy of Liquor Merchants Association.
“We lost one segment of liquor consumers completely; that of the floating population. Earlier, many from neighbouring States used to come here for purchasing electrical, electronics and plumbing goods, tiles and various other items, and they in turn used to purchase liquor from here for their consumption. But now, with the rates of these items being the same across the country, the flow of people from other States have stopped.”
Moreover, the ‘inauspicious’ Tamil month of Aadi has affected the booze sales further as no marriages, housewarmings and other functions are conducted these days.
Further, the government’s excise revenue has already received a cut of 10 to 12 per cent as 165 liquor shops on highways were closed down, said deputy commissioner (excise) R Anbazhagan.