Budget impact: Tax on liquor licence fee scrapped retrospectively

Many entities were served notices after the 15% tax was introduced in April 2016

Liquor shops, restaurants, hotels, and clubs serving liquor have got relief from service tax on the licence fee. 

The 2019-20 Budget has abolished the controversial and litigated service tax on the licence fee paid by these entities to states. The Finance Bill, 2019, has done away with the tax with retrospective effect from April 1, 2016, when it was imposed. The Bill is yet to be passed in Parliament.

After the tax was imposed in 2016, notices were sent to many liquor shops and those serving alcohol, by the tax officials. The tax remained in force till June 30, 2017