GoM suggests reducing GST for AC restaurants

DELHI: The Group of Ministers set up to make Godds and Services Tax (GST) composition scheme more attractive on Sunday suggested lowering tax rates for manufacturers and restaurants under the plan to 1%.

At present, while manufacturers pay GST at 2%, the rate for restaurants is 5%. Traders currently pay 1%, reports PTI.

The GoM headed by Assam Finance Minister Himanta Biswa Sarma also suggested doing away with the tax rate distinction between AC and non-AC restaurants, those which are not covered under composition scheme, and tax them at 12%.

It also suggested that hotels which has room tariff of more than ₹7,500 should attract 18% tax rate.

Composition scheme is open for manufacturers, restaurants and traders whose turnover does not exceed ₹1 crore. This threshold was earlier ₹75 lakh and the GST Council earlier this month raised it to ₹1 crore from October 1.

With regard to traders, the GoM suggested two pronged approach for taxation under the scheme.

It suggested that traders who want to exclude the sale proceeds of tax-free items from its turnover, it can pay 1% GST. However, those traders who pay tax on total turnover, the tax rate has been proposed at 0.5%.

For example, supposing a trader deals in goods which are tax exempt as well as those which are taxable under the GST and has a turnover of ₹1 crore. Of this, ₹40 lakh turnover is from sale of tax-exempt items and remaining ₹60 lakh from taxable goods.


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