Dining out may get cheaper again; GST rate on AC restaurants likely to be cut to 12%

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Updated: October 30, 2017 4:54:19 PM

Dining out at AC restaurants might get cheaper again as the finance ministry is planning to bring down the GST rates from 18% to 12%, following consumers' complaints of higher bills.

Eating at AC restaurants might get cheaper as the finance ministry is planning to bring down the GST rates from 18% to 12%, following consumers? complaints of higher bills.

Dining out at AC restaurants might get cheaper again as the Group of Ministers (GoM) on Sunday recommended lowering of tax rates under the GST composition scheme from 18% to 12%, media reports said. The issue of reducing the GST slab for AC restaurants would be taken up at the next council meeting scheduled on November 9.

The Group of Ministers (GoM), which met on Oct 29, took a call on the issue. The GoM, in its first meeting on October 6, also reportedly constituted a composition scheme to provide differential GST rate fro non-AC restaurants.

Currently, GST is levied at 12% on non-AC restaurants while it is 18% for air-conditioned ones. The GoM will examine whether the AC restaurants pass on the benefit of cost reduction under GST to consumers and if they are not, whether they should be disallowed input tax credit claims. To make the composition scheme more attractive, the GoM is looking whether the turnover of exempted goods can be excluded from the total turnover threshold for levying the tax under the composition scheme. It will also consider whether the scheme can be extended to taxpayers dealing in inter-state supplies of goods.

Under the GST regime, if you are in an AC restaurant, you will have to pay 18% tax irrespective of the fact that it serves alcohol or not and if you are eating in a Non-AC restaurant, you have to pay 12% as tax. It is made of Central GST (6%) and State GST (6%). The same rates also apply for local delivery restaurants.

The tax is also imposed on takeaways as well as food served from a non-AC area of a hotel or restaurant. The customers currently pay a uniform GST rate of 18% on all the takeaways from the non-AC area of the restaurant if a part of the facility has air conditioning. For example, if you have taken the food from the ground floor of an outlet which doesn’t have AC, you will still have to pay 18% tax if the third floor of the same outlet has an AC restaurant.

(First published on Monday, October 16, 2017, on www.financialexpress.com)

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