Dining out in all restaurants gets cheaper as the GST Council has slashed tax rate to 5% without input tax credit, J&K Finance Minister Haseeb Drabu told CNBC-TV18. Only the restaurants with rooms above Rs 7,500 will be taxed at 18% with ITC. The GST was earlier levied at 12% on non-AC restaurants while it is 18% for air-conditioned ones. Meanwhile, the GST Council has raised the threshold for the Composition Scheme to Rs 1.5 crore, West Bengal Finance Minister Amit Mitra said. The threshold cap for the Composition Scheme has been fixed to Rs 2 crore.
The Composition Scheme was earlier one crore. Under the GST regime, start-ups and small businesses are given the choice to opt for the Composition Scheme, in which taxpayers are required to file summarised returns on a quarterly basis, instead of three returns every month. Composition scheme is open for manufacturers, restaurants and traders whose turnover does not exceed Rs 1 crore. This threshold was earlier Rs 75 lakh, which was raised to Rs 1 crore from October 1.
The decision follows the massive GST rejig in which 177 items under the highest tax slab of 28% were brought down to the 18% or lower tax brackets. The GST Council has decided to keep only 50 items, mostly demerit, sin and luxury goods in the 28% bracket.
GST Council member and Bihar state finance minister Sushil Kumar Modi said on the sidelines of the meeting that the Council has lowered tax rates on a wide range of items, bringing down the number of items remaining in the highest slab of 28% from 227 to only 50. “There were 227 items in the 28% slab. The fitment committee had recommended that it should be pruned to 62 items. But the GST Council has further pruned 12 more items.” Sushil Modi said.
According to Amit Mitra, in the last three months, there has been a loss of Rs 60,000 crore to the Centre and Rs 30,000 crore to states.