Mumbai, Mar 1 (TNN): Going out for a glass of beer in an air-conditioned bar next door will soon burn a hole in your pocket, not to mention staying in a hotel on weekened jaunts.

And, this hike has soured the mood of customers and hoteliers and restaurateurs alike. Imposition of service tax up to a minimum of 3% on air-conditioned restaurants and bars and 5% on hotel accommodation will increase the prices of booze, rooms as well as food and that will affect the profitability of the business, say hoteliers in the city. "After a wave of inflation, such an addition of tax will pose a threat of closure,'' said Sukesh Shetty, general secretary of AHAR, association of hotels, restaurants and bars.

After the recent hike in the prices of essential commodities such as milk and vegetables, restaurants, bars and hotels pushed their rate charts up by a minimum 20%.

Finance minister Pranab Mukherjee said he wanted to levy service tax on hotel accommodation, in excess of the declared tariff of "Rs 1,000 per day with an abatement of 50% so that the effective burden is only 5% of the amount. He also said it would be levied on the service provided by AC restaurants that have license to serve liquor, by giving an abatement of 70%. "The effective burden will be 3% of the bill,'' he stated.

Kamlesh Barot, vice-president of Federation of Hotels and Restaurant Association of India, said, "This is against our efforts to keep prices competitive in the international market. Instead of a boost to tourism, extra tax on rooms is making business tougher than before."