In a significant policy shift aimed at making Gujarat International Finance Tec-City (GIFT City) more attractive to professionals, investors, and multinational companies, the Gujarat government has announced major tax relief on liquor served within the financial hub. Through two separate notifications, the state government has drastically reduced Value Added Tax (VAT) on foreign liquor and abolished a special fee that had significantly increased alcohol prices in the city.
The move is expected to bring liquor prices in GIFT City closer to those in major metropolitan cities such as Mumbai and Delhi, addressing a long-standing concern among professionals, hospitality businesses, and government officials.
VAT Reduced from 65% to 25%
Under the new policy, the Gujarat government has reduced VAT on foreign liquor served in GIFT City from 65% to 25%. In addition, it has completely removed a special fee of approximately ₹240 that was previously charged on every 30 ml serving of alcohol.
According to sources familiar with the development, the decision was taken to eliminate pricing disparities that made liquor in GIFT City significantly more expensive than in other major Indian cities. Officials believe that creating a more competitive hospitality environment will help attract national and international talent to the financial hub and support a more vibrant evening social life.
A senior government official said the state has effectively removed a long-standing anomaly that caused alcoholic beverages in GIFT City to cost several times more than comparable drinks in most Indian metros.
How Much Cheaper Will Drinks Become?
The impact of the tax reduction is substantial. Officials provided examples showing how the previous taxation structure inflated retail prices: A 30 ml serving of foreign liquor with a menu price of ₹100 previously cost customers approximately ₹561, and this amount included the ₹240 special fee and ₹221 VAT calculated at 65%.
Following the latest changes: The same ₹100 drink will now cost only ₹125.
The reduction becomes even more dramatic for premium liquor:
- A 30 ml drink listed at ₹1,000 on the menu earlier cost about ₹2,046 after taxes and fees.
- Under the revised taxation structure, the final price will drop to approximately ₹1,250.
Why Were Prices So High Earlier?
Sources explained that a special fee of ₹8,000 per bulk litre was being imposed uniformly across all liquor categories in GIFT City. This translated to roughly ₹240 for every 30 ml serving. Such a fee does not exist in comparable markets like Mumbai or Delhi.
Additionally, the 65% VAT in GIFT City was calculated not only on the menu price but also on the special fee. In contrast, many other states levy VAT only on the menu price itself.
This method of calculating VAT significantly increased the final retail cost of alcoholic beverages.
According to officials, the combined effect of the special fee and the VAT structure made liquor prices uncompetitive and reduced GIFT City’s attractiveness as a global business and lifestyle destination.
Hospitality operators also reportedly complained that the pricing structure reduced profit margins, discouraged new investments, and hindered the development of a strong Food and Beverage (F&B) ecosystem within the city.
A Potential Game-Changer for GIFT City
Sources described the government’s decision as a potential “game-changer.” Feedback from professionals working in GIFT City, hospitality businesses, and even government officials indicated that the high cost of liquor had become a major deterrent.
Authorities believe that more reasonable pricing will improve the overall lifestyle ecosystem in the financial hub, making it easier to attract and retain highly skilled professionals from across India and abroad.
The move is also expected to encourage further investment in restaurants, hotels, lounges, and other hospitality ventures operating in the region.
Linked to Gujarat’s Commonwealth Games Ambitions
Insiders indicated that the decision may also have a strategic connection to Gujarat’s ambitions to host the 2030 Commonwealth Games.
Several proposed venues for the event are located near GIFT City. Officials suggested that similar liquor-sale provisions could potentially be introduced in areas where athletes, officials, and visitors associated with the Games may stay.
A senior government official noted that the latest policy changes were implemented while keeping future international events and visitor requirements in mind.
Part of a Broader Relaxation of Prohibition Rules
The latest tax relief follows a series of relaxations introduced by the Gujarat government in recent years regarding liquor regulations within GIFT City.
In December 2023, Gujarat relaxed prohibition rules in GIFT City, allowing eligible individuals in the fintech hub to consume liquor and entertain guests. Further easing of liquor-related restrictions was introduced in December 2025.
Officials noted that the 2023 decision marked the first significant relaxation of Gujarat’s prohibition policy in a specific zone, reflecting the state’s efforts to position GIFT City as a globally competitive financial and business center.
The latest reduction in VAT and removal of the special fee represent the most significant step so far in making the city more attractive to multinational corporations, financial institutions, investors, and highly skilled professionals considering relocation to India’s premier international financial hub.
By reducing taxes and bringing prices closer to those seen in major metro cities, the Gujarat government hopes to strengthen GIFT City’s appeal as both a global business destination and a modern urban lifestyle center.
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