The GST Council has decided to cut tax rate for restaurants to 5 percent without Input Tax Credit. The new tax rate would be applicable to both AC and non-AC restaurants, except those in five-star hotels. Outdoor catering rate has been fixed at 18 per cent.
Hotels with Rs 7,500 room rent have been fixed at 18 per cent with input tax credit. Under the previous GST structure, it all boiled down to 12 per cent GST for non-AC restaurants and 18 per cent GST for AC restaurants. In case of five-star hotels, the charge was much more 28 per cent.
Under the previous rates if any part of a restaurant has an air conditioner, 18 per cent is charged as the GST. That also meant that takeaways from AC restaurants were levied with the same 18 per cent.
The GST Council also raised the threshold for the composition scheme. Under the composition scheme, traders are allowed to pay a fixed rate to avoid GST paperwork. Threshold for composition scheme was hiked to 1.5 crore.
West Bengal finance minister, Amit Mitra said “aggregate loss of revenue was around 60,000 crore for Centre and 30,000 crore for states in last 3 months”.
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