GST relief for hotels, outdoor catering; hefty hike in rate for caffeinated drinks

By: |
Published: September 21, 2019 6:18:04 AM

The Council did away with the requirement of filing annual returns for taxpayers up to Rs 2 crore turnover, as part of the moves to reduce compliance burden.

gst council, gst council meet, gst council meet in goa, gst council next meeting, gst council next meeting date, gst council meet outcome, FM Nirmala Sitharaman, finance ministerCouncil increased the tax rate for caffeinated drinks to 28% from 18%; as these beverages, touted to be harmful to health, are now in the highest tax bracket, they will now also be subjected to a 12% cess.

Hotel and tourism industries got significant tax reliefs on Friday, as the GST Council that met here reduced the taxes on hotel rooms to the 0-18% range depending on their tariffs and cut the rate for outdoor catering to 5% without an option to claim input tax credit.
Besides, the Council increased the tax rate for caffeinated drinks to 28% from 18%; as these beverages, touted to be harmful to health, are now in the highest tax bracket, they will now also be subjected to a 12% cess.

The Council did away with the requirement of filing annual returns for taxpayers up to Rs 2 crore turnover, as part of the moves to reduce compliance burden.

However, it also introduced some new slabs for items like semi-precious stones, complicating the GST structure even further.  Aerated drink manufactures won’t be allowed to adopt the composition scheme, which offers a benign tax rate on turnover.

Hotels with room tariff of Rs 7,500 and above will now attract GST at 18% against 28% earlier, while those with tariffs in the range Rs 1,000-7,500 band will pay GST at 12%. Hotels which charge tariffs below Rs 1,000 have been exempted. Revenue implications of above two decisions are seen at Rs 1,500 crore annually. However, the automobile industry, seeking tax  reliefs for quite some time, has been left high and dry by the Council.

The only step it took for the sector was to reduce the cess levied on passenger vehicles with engine capacity 1500 cc (diesel) and 1200 cc (petrol) and length up to 4,000mm designed for carrying more than 10 persons but up to 13 persons to 1% from 15%. As reported by FE earlier, the GST fitment committee had taken the view that GST rate cut on automobiles would lead to Rs 54,000 crore revenue loss annually along with an additional impact on the removal of cess, which is inevitable under law once an item is removed from the highest 28% tax bracket.

Corporate tax rate cut decoded! Why FM Sitharaman’s announcement is a Diwali bonanza for economy

Similarly, since rate cuts for cement and biscuits have large revenue implications and might not spur sales much, the committee did nor favour reducing the taxes for these items as well.

Other rate reductions approved by the Council are as follows: 18% to 12% on parts of slide fasteners, 18% to 5% on mineral fuel, 12% to 5% on wet grinders, 5% to nil on dried tamarind and plates and cups made of leaves/flowers/bark, 3% to 0.25% on cut and polished semi-precious stones. Also, a rate of 5% has been introduced for specified goods for petroleum operations undertaken under the Hydrocarbon Exploration Licensing Policy (HELP).

Further, the GST rate for railway wagons, coaches, rolling stocks has been raised to 12% from 5% in a move to address the concern of ITC accumulation with suppliers of these goods. The GST Council didn’t even take up for discussion rate cut proposal for automobiles and biscuits, official sources told FE.

Do you know What is Repo Linked Lending Rate (RLLR), Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.