Panel Has Decided To Review GST Imposed On Restaurant

The GST Council tweaked rules on Friday to make life simpler for small businesses and exporters and also cut rates on 27 products, including man-made yarn, which was a key demand of the textiles sector, in a bid to mollify those complaining about the new tax regime.

Similarly, the tax rate on rotis and khakra was cut along with savouries and ayurvedic and homoeopathic medicines. PM Narendra Modi was quick to comment that the decisions would help small and medium businesses. The GST Council on Friday decided to review several issues, including the tax structure for restaurants, amid complaints that several of them were not passing on the benefit of input tax credit through price cuts.

FM Arun Jaitley said there is an impression that large restaurants with 18% tax have not reduced the prices despite the benefit of input tax credit being available. A group of state ministers, which will submit its report in two weeks, will revisit the taxation structure for them and examine if the liability can be reduced an alternate structure should be put in place.

The GoM, which Jaitley said will set up soon, will also examine if the Rs 1-crore turnover, which is the threshold for the composition scheme, should include revenue generated from the sale of exempted goods. A food trader for instance, may be selling unbranded food pro ducts such as flour and daal along with packed and branded items, which face GST. Currently, all sales are included in calculating the turnover and an exemption is expected to result in massive leakages, tax experts warned.