GST Council may cut tax rate on eating at AC restaurants from 18 per cent to 12 per cent.
Mumbai: The GST Council may cut tax rate for air conditioned or AC restaurants that will make eating a dinner or a lunch at these eateries much cheaper. A report in The Times of India says the top most decision making body of GST may also do away with input tax credit for eateries.
At present, there is 18 per cent GST slab fixed for eating at AC restaurants. It is expected the council will bring it down to 12 per cent, thus making dining at these hotels more affordable.
Earlier, authorities received complaints alleging that restaurants were keeping with themselves benefits of input tax credit for taxes paid by suppliers and not transferring the effective lower tax rate incidence.
The council decided to form a special panel of some finance ministers to look into the pouring complaint. The group took up at its meet the issue of restaurant owners pocketing the benefits of input tax credit. "It is one segment that was not passing on the benefits to consumers," said a senior officer.
According to the TOI report, once the GST on AC restaurants is cut, there will be two tax slabs for restaurants -- 5 per cent for eateries with a turnover of up to Rs 1 crore and that opt for the composition scheme. Apart from that there will be 12 per cent for others. There is, however, no clarity on the levy at restaurants in five-star hotels at the moment, the report adds.