GST rate on restaurants slashed to 5%: Will eating out get cheaper?

GST rate on restaurants slashed to 5%: Will eating out get cheaper?

Procter & Gamble, Nestle and Perfetti Van Melle said they have either chose to cut down prices or are planning to do so after the GST Council cut tax on consumer goods to 18 percent from 28 percent, the Times of India reported. The changes will be effective from November 15.

There were 228 items in the 28% slab before the meeting.

Exports of services to Nepal and Bhutan, who are already exempted from the GST, will now be eligible for claiming Input Tax Credit (ITC) in respect of goods or services used for effecting such exempt supply of services to Nepal and Bhutan.

The GST Council headed by Finance Ministery Arun Jaitley have chose to increase the annual turnover eligibility for the composition scheme to Rs 2 crore. GST has five tax slabs of 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent. The restaurants that are housed in starred hotels, will attract GST at 18 per cent.

Summary: The initial 18% tax rates for air-conditioned restaurants and 12% for non air-conditioned restaurants were slashed to 5% GST on all food items from November 15.

Hotels with Rs 7,500 room rent have been fixed at 18 per cent with input tax credit. The GST Council also made a decision to give a simplified GSTR-3B form for those businesses which have nil tax liability or have no transactions to file in invoice. It decided that filing GSTR 3B would continuing till March 31, 2018.

The move to widen the turnover threshold is aimed at easing the compliance burden for taxpayers as they will have to file returns only once in a quarter as against monthly returns that needs to be filed by other normal taxpayers. "Thereafter eligibility for composition will be increased to Rs 1.5 crore per annum".

Industry body Assocham said the decision of the GST Council would lead to a pick-up in consumer demand and significantly revive the business sentiment.

The GST - which was meant to replace India's myriad indirect taxes with one single tax - has come under severe criticism. "Hopefully, this is the start to the changes which are eagerly anticipated". And menus don't have tax inclusive rates printed.

"As typically, GST in relation to construction becomes a cost to most, non lowering of the significant tax costs of cement has disappointed the construction industry and customers as a whole", he said.