When you have  a special guest and a special occasion, a toast is an essential and gracious  part of a successful business or social meal. A successful toast  has the following norms:  
  
FOR THE TOASTER 
 
The best time  to offer a toast is when the champagne has been poured, or wineglasses  refilled, or, when dessert is served. Don't wait till the meal is  nearly over. 
 
All diners must  have champagne, wine, or juice (for non-drinkers) in their glasses. To toast with water is to invite bad luck. If you have no glass, just raise your hand as if it held a glass.  
  
Wait for all noise (by waiters, or conversing guests) to die down. If necessary, tap the rim of the goblet very gently.

The host has  the prerogative to make the first toast. But, if it looks like the  host is not going to, you may do so, after whispering to the host: I'd like to make a toast. Would you mind if I do? Most hosts will say: Not at all. Please go right ahead.  
  
Stand at your  place to make the toast (especially at large gatherings, so that you are in view of all diners), and look at the person being honored, holding your glass in your right hand.  
  
Avoid 'dirty'. off-color words or joke that may offend the sensibilities or aesthetic sense of the diners, particularly the ladies present; or a statement that  belittles anyone, even if you mean it in jest; a political, religious, or overtly serious statement.  
  
A good toast  is light, warm complimentary, and perhaps gently humorous:  
  
Do no speak longer  than three minutes. Ideally, speak for a minute or two, loudly and clearly. At the end of your speech, raise your glass in the direction of the person being toasted, and take a sip. 
 
FOR OTHER DINERS
  
Do not rise for  the toast, unless it is the first toast at a formal banquet (when all rise  except the person being honored), or the guest is an important dignitary  from another company or country, or a very distinguished and respected  person.  

At the end of  the toast, raise you glass (if you do not have a wineglass, the water tumbler will do), even if it is empty, and pretend to drink. Do not hold up proceedings by asking to have your glass filled. Do not gulp all your drink in one go. Take a sip.  
  
As you raise  your glass, look the honored person in the eye, nod your head in agreement  of the words, said about him, and if appropriate, murmur words like, 'Hear,  Hear', or "bon voyage", or "Good luck", or "here's to you" "Good health".  But avoid the boisterous "cheers" or any other words spoken with drunken  loudness.  
  
Do not talk, nor continue to eat, or leave the table during the toast.  
  
Before you take a sip, turn to each of your dinner partners, raise your glass and nod pleasantly and then take a sip. You do not, however, have to clink glasses with all.  
 
FOR THE PERSON  BEING TOASTED  
  
If you are being  toasted, remain seated, unless you are on the dais, or in the audience, and are introduced before the toast is actually made. Then rise briefly to let everyone know who and where you are. Then sit down again.  
  
At the end of  the toast, rise and look around the table, mouth your thank-yous, and then sit again. But you do not drink along with the others.  
  
Select an appropriate moment to thank the toaster and the gathering, best when glasses are refilled  after the first toast. Stand, raise your glass in the air, say your  words of thanks, and then take a sip. The other diners will also do so.

Thank your hosts and the gathering pleasantly. Thank the toaster by saying, thank you for  those very warm words. And, Mrs.........., as usual, you have given us this  truly excellent, not to say very fattening, dinner. Thank you booth also for giving us this opportunity of one last evening with our closest  friends. My Wife and I are going to miss all this, and in particular the  support, and togetherness of all of you, our dear friends of nearly a quarter century. Thank you for your love and support all these years, and  your good wishes for the future.  
  
Clinking Glasses

The custom has a number of interesting origins. One story says that  people clinked glasses so that wine was intentionally spilled into each  others glass. This was to ensure that no one is being poisoned.  Another story is that all alcoholic drinks were supposed to contain actual  'spirits'. Since bells and other sounds were used to drive away demons, the clinking of glasses was supposed to do that.  
  
Words of cheer

When the occasion is informal, then the toast inspires a hearty and cheerful  response from those present. Some words in different languages, used  while raising the glass to salute the moment or the person are Cheers!(English),  A Votre Sante!(French), Prost! Or, Zum Woh!(German), Cin Cin,Chin! (Italian) ,  Kampai! (Japanese) and Skaal! (Scandivavian). 

courtesy: Article by Renu Motto in HR News Journal