The Goods and Services Tax on restaurant bills may be reduced at the GST Council's next meeting in November.
The Council may lower the rate to 12 percent from 18 percent, with the caveat that such eateries cannot avail the benefit of input tax credit, a senior government official told BloombergQuint on the condition of anonymity.
Currently, air-conditioned restaurants charge an 18 percent GST, while non-air conditioned eateries levy 12 percent, and avail input tax credit. Restaurant owners with an annual turnover of Rs 1 crore can also avail the composition scheme and pay a flat GST rate of 5 percent on their turnover.
The Mint newspaper had reported this development first.
With many restaurants choosing to not pass on the benefit of input credit to customers, the Council will examine a proposal to lower the rate, the official cited above told reporters in New Delhi requesting anonymity. Taxpayers get input tax credit or credit on taxes paid by them on their inputs, and can lower the output tax of the finished good.
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According to another government official, inputs for restaurants are generally exempted food items on which there is no input tax credit. That's another reason eateries do not pass this benefit by lowering rates.
The GST Council in its last meeting had constituted a group of ministers, which has been tasked to review GST rates for restaurants along with looking at ways to make the composition scheme more attractive.
The GoM held its first meeting on October 15, and will meet next on October 29 to finalise its recommendations on GST rates on eateries and the composition scheme. These recommendations will be tabled before the Council in its November meeting.
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