GoM for 12% GST on AC eateries, composition scheme tax cut

TIL Desk/Business/New Delhi/ The Group of Ministers set up to make GST composition scheme more attractive on Sunday suggested lowering tax rates for manufacturers and restaurants under the plan to 1 per cent. At present, while manufacturers pay GST at 2 per cent, the rate for restaurants is 5 per cent. Traders currently pay 1 per cent.

The GoM headed by Assam Finance Minister Himanta Biswa Sarma has 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 per cent.

It also suggested that hotels which has room tariff of more than Rs 7,500 should attract 18 per cent tax rate. Composition scheme is open for manufacturers, restaurants and traders whose turnover does not exceed Rs 1 crore. This threshold was earlier Rs 75 lakh and the GST Council earlier this month raised it to Rs 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 per cent GST. However, those traders who pay tax on total turnover, the tax rate has been proposed at 0.5 per cent.