Modi Government May Bring AC And Non-AC Restaurants in Same GST Bracket
New Delhi, Oct 16: The Modi government is considering to scrap the difference in GST taxes between air-conditioned and non-air-conditioned restaurants. The GST panel may make taxes levied on both the types of restaurants to be 12 per cent.
A report in The Mint said that a five-member panel, formed by the GST council, may retain tax on five-star restaurants to be 18 per cent. Currently, all AC restaurants are taxed 18 per cent, while all non-AC restaurants are charged 12 per cent GST.
The report said the final decision on this will be taken at a GST council meeting on November 9. The meeting will be chaired by Finance Minister Arun Jaitley. A person privy to the development said there was convergence on views that the rates on AC restaurants should be lowered.
The panel will also decide whether AC restaurants should be given the benefit of tax rebates as they do not pass on the rebate to consumers.
The Modi government has reviewed GST in view of the slump in economic growth. In the 22nd GST council meet, it was announced that many items would be brought down from 28 per cent slab to 18 per cent slab. Many articles were also brought down from 18 per cent to 12 per cent slab. The decision was taken to encourage public spending after the Reserve Bank of India, while announcing the monetary policy, said the GST had had an adverse impact on GDP growth.
India’s GDP had slumped to 5.7 per cent in the first quarter of the fiscal year 2017-2018. Former prime minister Manmohan Singh called demonetisation and GST a double whammy to the economy.