Group of Ministers for 12 percent GST on AC eateries, composition scheme tax cut

The ministerial panel working to make GST composition scheme more attractive today suggested slashing tax rate to 1 per cent for manufacturers and restaurants while easier norms for traders opting for it Currently manufacturers and restaurants with turnover up to Rs 1 crore pay GST under composition scheme at 2 per cent and 5 per cent respectively The same for traders is 1 per centRepresentation picIn its second meeting the Group of Ministers headed by Assam Finance Minister Himanta Biswa Sarma today also suggested doing away with the tax rate distinction between AC and nonAC restaurants those which are not covered under composition scheme and tax them at 12 per cent with input creditIt also suggested that eating out at hotels which has room tariff of more than Rs 7500 should attract an uniform 18 per cent tax rate instead of any separate category for 5 star hotel The GST Council chaired by Union Finance Minister Arun Jaitley and comprising his state counterparts on November 10 in Guwahati is likely to take up the recommendations of the GoM which was set up earlier this monthWith regard to traders the GoM suggested two pronged approach for taxation under the composition scheme It suggested that traders who want to exclude the sale proceeds of taxfree items from its turnover it can pay 1 per cent GST Goods and Services Tax However those traders who pay tax on total turnover the tax rate has been proposed at 05 per centFor 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 Rs 1 crore Of this Rs 40 lakh turnover is from sale of taxexempt items and remaining Rs 60 lakh from taxable goods So traders deciding to pay tax on total Rs 1 crore turnover can pay 05 per cent while those wanting to pay tax on Rs 60 lakh can cough up 1 per cent GSTThe GoM decided that tax rates under composition scheme for restaurants and manufacturers be lowered to 1 per cent For traders the ministerial group suggested two tax rates an official told PTI The GoM also recommended allowing businesses who are engaged in interstate sale to avail the composition scheme he addedAround 15 lakh businesses opted for composition scheme which allows them to pay taxes at a concessional rate and makes compliance easy under the Goods and Services Tax GST which rolled out from July 1 There are over 1 crore businesses registered under GST 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 1While a regular taxpayer has to pay taxes on a monthly basis a composition supplier is required to file only one return and pay taxes on a quarterly basis Also a composition taxpayer is not required to keep detailed records that a normal taxpayer is supposed to maintain The GoM was tasked with revisiting the tax structure of different categories of restaurants with the aim of rationalising or reducing the rates apart from making composition scheme more attractive for businessesCurrently GST is levied at 12 per cent on nonAC restaurants while it is 18 per cent for airconditioned ones The other members of the GoM are Bihar Deputy Chief Minister Sushil Modi Jammu and Kashmir Finance Minister Haseeb Drabu Punjab Finance Minister Manpreet Singh Badal and Chhattisgarh Minister of Commercial Taxes Amar Agrawal The GoM has also suggested that manufacturers engaged in job works can be allowed to opt for composition scheme the official added