The Group of Ministers (GoM) Committee has suggested some changes to make the composition scheme more attractive and by lowering taxes with a flat 1% tax on restaurants. Presently, Manufacturers and restaurants whom annual turnover is more than Rs 1 crore are entitled to pay GST at the rate of 2 and 5 percent respectively under the composition scheme, whereas traders are liable to pay 1 per cent GST.
The GoM chaired by Assam Finance Minister Himanta Biswa Sarma has also recommended levying 12 percent GST at restaurants, by eliminating the tax rate differences between air-conditioned and non-AC restaurants, those are not availing GST composition scheme.
The panel of state Finance Ministers has also recommended that hotels whose tariff is worth more than Rs 7,500 could be levied 18 per cent GST. Presently, AC restaurants levying 12 percent GST whereas AC restaurants attracting 18 percent tax rates under GST.
Manufacturers, traders and restaurants who have annual turnover of Rs 1 crore can avail composition scheme under the indirect taxation system. Previously, the threshold limit of composition scheme was Rs 75 lakh and earlier this month the government has raised the limit from Rs 75 lakh to Rs 1 crore from 1st October.
In respect of traders, the committee has recommended two-pronged methods for taxation under the scheme. Those Traders who want to exclude from the sale of tax-free items, they can pay 1 percent GST and those want to pay taxes on the basis of annual turnover, the tax rates have been decided 0.5 percent for them.
Experts told to media sources, “The GoM decided that tax rates under composition scheme for restaurants and manufacturers be lowered to 1 percent. For traders, the ministerial group suggested two tax rates.” The committee also recommended that business enterprises those are involved in the interstate sale can avail the composition scheme under GST
Nearly, 15 lakh business enterprises had opted composition scheme under the GST. Through this, they are able to pay taxes at concessional rates and compliance will be easier for them. The Goods and Services Tax Regime was implemented from 1st July across the country. Nearly 1 crores businesses registered under the new indirect taxation regime.
The taxpayers who had opted composition scheme under GST, for them it is not necessary to keep detailed records but for the normal taxpayer, it is essential to maintain the records. The GoM committee was constituted earlier this month and the main aim of formulating GoM to review tax rates of different categories of restaurants including AC and non-AC apart from making the GST composition more attractive and feasible for manufacturers, traders, and restaurants.
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The other four members of the GoM committee are Bihar Deputy Chief Minister Sushil Modi, Jammu and Kashmir Finance Minister Haseeb Drabu, Punjab Finance Minister Manpreet Singh Badal and Chhattisgarh Minister of Commercial Taxes Amar Agrawal.
