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Oct, 18 2017

GST on restaurants to cut down from 18% to 12%

The industry lobbied for a 12 percent rate for all restaurants but with the benefit of input tax credit kept intact

Eating out in air condition comfort could get cheaper if a proposal to fix the GST at 12% on all restaurants is adopted by GST council. Air conditioned restaurant currently charging 18% GST and Non air conditioned charging 12%.

A government official said “It has been felt that the restaurants have not passed on the benefit of input tax credit to consumers. The lower rate of 12 per cent may be extended to cover the entire sector. The GST Council had set up a panel to look into the matter. Representations were made to the panel about restaurants not passing on the benefit of input tax credit while levying 18 per cent GST. After the imposition of GST on July 1, taxes on such services rose to 18 per cent from 15 per cent but the rationale was that input tax credit would neutralise the increase. Following lobbying by the industry, the GST Council set up a panel under Assam Finance Minister Himanta Biswa Sarma to make the composition scheme more attractive and revisit GST rates on restaurants. The panel, which had been asked to give its report in two weeks, has finalised its recommendations.”

The industry lobbied for a 12 percent rate for all restaurants but with the benefit of input tax credit kept intact.

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