New Delhi: After the GST Council meeting in New Delhi on Friday, Finance Minister Arun Jaitley said the committee of finance ministers will revisit the tax on restaurants and hinted at a possible reduction.
Air-conditioned restaurants may get relief as the group of ministers will discuss if the GST can be brought down from 18 percent to 12 percent and submit a report in two weeks.
“Restaurants with turnover Rs 1 crore with AC charge 18 percent GST. We will examine if this can be lowered,” Jaitley said. He said the GST council had noted that restaurants were not passing on the benefit of input credit that they received to the consumers.
From July 1 this year, people have paid 12 percent GST on their bills in non-AC restaurants. The tax rate for air-conditioned restaurants and those with a liquor licence is at 18 percent while five-star hotels have charged 28 percent GST.
But the taxation structure for restaurants wasn’t the big ticket announcement. The GST Council in its 22nd meeting today announced a slew of relief for exporters and small businesses.
Businesses with annual turnover up to Rs 1 crore can now opt for the composition scheme, which enables them to pay tax at a flat rate without input credits. This threshold was earlier Rs 75 lakh.
The optional composition scheme is designed to bring simplicity to payments and to reduce compliance costs.
In the service sector, composition scheme is available only for one sector – restaurants. Under the scheme, businesses have to file only one quarterly return with details of total turnover.
The tax rates under composition scheme is 1 percent for traders, 2 percent for manufacturers and 5 percent for restaurants.
Finance Minister Arun Jaitley announced that returns for the month of July and August will be refunded through cheques from October 10 and October 18 respectively. He also said an e-wallet will be created for each exporter by April 1, 2018 for ease of getting refunds.
Exporters had sought that the government fast-track the refund process, fearing over Rs 65,000 crore could get stuck in GST refunds.