A group of state finance ministers have suggested fresh changes to the Goods and Services Tax, proposing a cut in the levy at restaurants and a flat 1 per cent for small traders, manufacturers, and eateries that opt for less onerous composition scheme. Sources said a panel five state finance ministers has suggested a flat 12 per cent GST for standalone restaurants, air-conditioned or not, and an 18 per cent levy at joints located inside hotels. The current GST in all restaurants is 18 per cent.
The respite on composition scheme will lower the burden for smaller eateries, which currently attract 5 per cent tax. The scheme, that also applies to traders and manufacturers with annual turnover of Rs 20 Lakh to Rs 1 Crore, comes with a flat rate of tax and a much lower compliance burden where only the sales details have to be disclosed with no requirement to file detailed returns with invoices. Also, the returns have to be filed on a quarterly basis. The group of ministers comprising finance ministers Hemanta Biswa Sarma (Assam), Sushil Modi (Bihar), Haseeb Drabu (J&K), Manpreet Badal (Punjab) and Amar Aggarwal (Chattisgarh) has also suggested that the composition scheme be extended to inter-state sale of goods and services but no input tax credit will be available as was suggested by some states.
The tax burden on traders and manufacturers is lower with 1 per cent, and 2 per cent. There will be two options for traders. Those willing to pay tax on their total turnover, which includes revenue from the sale of exempted goods and non-exempted items, will pay 0.5 per cent. But those who take the pain to segregate income from non-exempted products will have to pay 1 per cent tax on the sale of these goods.
A final decision will be taken by the GST Council, comprising union and state finance ministers, in November.
