GST rate cut: GoM suggests tax on AC restaurants to be reduced to 12%

A group of ministers proposed on Sunday modifying the Goods and Service Tax rates for businesses eligible for the composition scheme, the PTI reported. The panel suggested that the tax rate on AC and Non-AC restaurants should be 12%. They also suggested that tax rate of 1% for traders and restaurants with an annual turnover of Rs 1 crore or less, which is 2% and 5% of their turnover as GST. By choosing the composition scheme, small taxpayers could avoid tiresome paperwork and pay GST at a fixed rate of their turnover.

The Group of Ministers (GoM) was headed by Assam’s Finance Minister Himanta Biswa Sarma. They also suggested that hotels with charges over 7,500 must be taxed 18%. These recommendations may be considered when the next GST Council meets, which is expected to be on 9-10 November. The Mint reported that the panel also recommended promoting more businesses to come under the composition scheme by increasing the yearly turnover threshold to Rs 1.5 crore. An official told PTI that “The GoM decided that tax rates under composition scheme for restaurants and manufacturers be lowered to 1 percent.  For traders, the ministerial group suggested two tax rates”. Besides Sarma, the GoM includes Jammu and Kashmir Finance Minister Haseeb Drabu, his Punjab counterpart Manpreet Singh Badal, Chhattisgarh Commercial Taxes Minister Amar Agrawal and Bihar Deputy Chief Minister Sushil Kumar Modi.

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