Mumbai: Apart from reducing the tax burden on small and medium businesses and altering rates on several items, the GST Council on Friday addressed the tax structure of restaurants, citing complaints that they were not passing on GST benefit to consumers.
“Members wanted to revisit tax structure of restaurants with more than Rs 1 crore turnover,” said Finance Minister Arun Jaitley, adding that the panel will review the 18 per cent GST currently levied on eating out at AC restaurants.
Under the current GST regime, eating out at restaurant can attract two tax rates – 12 per cent for non AC restaurants and 18 per cent at AC restaurants. Additionally, restaurants that are partially or fully AC or those that serve alcohol attract 18 per cent GST.
“There is an impression that large restaurants with 18 per cent tax have not reduced the prices despite the benefit of input tax credit being available,” said Jaitley.
A group of state ministers, is due to its report in two weeks. They will examine if the tax liability can be reduced an alternate structure should be put in place.