Double your budget for X'mas and New Year parties

Published: Dec 10, 2011, 06:56 IST | Urvashi Seth |

New directive from the Collector's office states that hotels organising parties will have to pay heavy taxes that include 25% of the entry fee, Rs 1 lakh for serving alcohol and playing loud music, and 25% of the total sponsorship revenue generated

New directive from the Collector's office states that hotels organising parties will have to pay heavy taxes that include 25% of the entry fee, Rs 1 lakh for serving alcohol and playing loud music, and 25% of the total sponsorship revenue generated 

Party buffs will not like this news, especially when the air is thick with Christmas carols and New Year excitement.

In a spoiler comparable to the Grinch who stole Christmas, as well as New Year's, the city collector has asked party organisers to part with 25 per cent of their entry fee and an equal share of the sponsorship money for any do on Christmas Day or New Year's Eve -- a law in place since 2004, but to be adhered to strictly from now.

Representation pic

There's more. Any commercial joint playing loud music and serving liquor must pay Rs 1 lakh monthly as entertainment tax to the government. The organisers will try and make up the losses by passing the costs on to you, the partygoer.

The developments were announced on Thursday. "In a meeting held with representatives of the hotel industry, the collector informed us to share 25 per cent of entry fee, if any, and sponsorship money with the government for any party that takes place in hotels for Christmas and New Year's," said hotelier Gogi Kohli.

"This comes even after hotels and restaurateurs are paying the new entertainment tax every month that came into effect last year. Moreover, the government also wants us to pay money for playing loud music."

Last year, the revenue ministry decided to tax live performances in city hotels and diners, under the Bombay Entertainment Duty Act, 1923. The amended act left many musicians jobless as most hotels decided to get rid of them to save on taxes. It also brought in many protests from musicians. Earlier in the year, there was an increase in the service tax on food served in AC hangouts, as well as a hike in liquor prices. 

"Now, there is this add-on, and to cope with it, most organisers will increase rates of entry fee passes.

Organisers collect sponsorship money as they are not capable of organising the entire party on their own, but sharing 25 per cent of this money means losses to us. Who wants to throw a party that brings losses? We might have to increase the cover charges this year or cancel the parties," said a hotel owner who was part of the delegation that attended the meeting.

The spokesperson of the Hotel and Restaurant Association-Western India (HRA-WI) said, "The categorisation of loud music is not clear. Many restaurants play music as well. Does this mean that everyone -- whether it is a pub, a banquet hall, a restaurant or a club � will be liable to pay Rs 1 lakh simply for turning on a stereo? Last year, there was the entertainment tax on live music in five-star hotels, pubs and discos, now, there is a tax on loud music."

Mrinally Rai, an event organiser, estimated that entry charges will surge by 40 per cent this year.

"Already the liquor prices are burning holes in the customers' pockets and now these added taxes are going to add to their woes. We can't bear the burden, and will have to transfer these to the customers. The government is killing the industry for which Mumbai has always been known. No party in the city happens without music and liquor."

Rai said she doubted if any client would shell out a lakh for a party that would cost them half. "Better not play any music," she added.

After Thursday's meeting, a representative from a five-star hotel said, "Five-star properties like ours have more than 10 banquet halls, which implies that the department will charge Rs 10 lakh for playing music and serving liquor. And if it is live music, we pay the hefty entertainment tax. This is unfair."

The hotel owners have now sought another appointment from the department and have asked for an opportunity to give a presentation on why these taxes should not be collected.

Collector says
Collector C Oak said, "Collecting 25 per cent on sponsorship and entry fees is an old rule framed in 2004. But
anybody who serves liquor and plays loud music will now have to pay Rs 1 lakh to the government. We are just implementing the order."

Tax overview
As per Bombay Entertainment Duty, 2010 (monthly)
Five-star hotels: Rs 2 lakh
Pubs: Rs 1 lakh (for properties outside five-star)
Beer bars and orchestra bars: Rs 50,000

Other costs
Charges collected by police: Rs 15,000-35,000
Indian Performing Rights Society licence: Rs 15,000
Public phonography licence: as per the negotiations
One-day party licence (Excise): Rs 8,500

Ranjeet Shetty, Matunga
All of these taxes will kill Mumbai's nightlife - the city's pride and prime attraction. As it is, we find it difficult footing bills in pubs and restaurants. Now, we can't even think of it.

Reshma Maisheri, Mulund
One after the other, they keep rolling out these newfangled taxes. Are we supposed to spend our New Year's and Christmas, which most of us look forward to with so much excitement, cooped up at home?

Jyoti Kakatkar, Colaba
What about the people who come specially to Mumbai to spend their New Year's? If taxes keep escalating, they'll hunt for better options. Wouldn't that eat into the government's revenue?

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