As the GST on value of food bill has been brought down to five percent from the huge slab of 18 per cent, people can really step out and enjoy their meals at AC and Non-AC restaurants, without feeling the unnecessary pinch on their wallets. But, those restaurants in hotels charging less than Rs 7,500 room tariff will charge 5 per cent GST but will not get input tax credit. Goods and Service Tax (GST) was being charged on existing rates which put additional tax burden on restaurant goers.
The government has notified lower GST rates in over 200 items, including chocolates, waffles, furniture, wrist watch, cutlery items, suitcase, ceramic tiles and articles of cement.
The decision on the rate cuts, which came into effect on Wednesday, was taken on November 10 during a meeting of the country's GST Council made up of representatives from the federal and state governments.
Restaurants had not been passing on the ITC benefit to customers, "that's why we decided not extend [this] benefit to the restaurant industry", Minister of Finance Arun Jaitley said.More news: Australia qualify for fourth World Cup in a row
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As many as 178 items of daily use were shifted from the top tax bracket of 28 per cent to 18 per cent, while a uniform 5 per cent tax was prescribed for all restaurants, both air- conditioned and non-AC.
With the latest decisions, GST has been cut on a host of consumer items such as chocolates, chewing gum, shampoo, deodorant, shoe polish, detergents, nutrition drinks, marble and cosmetics. Cars and motorcycles, home appliances such as dishwashers, washing machines and vacuum cleaners and tobacco products such as bidis and pan masala will be taxed in the 28% slab.
"There was unanimity that in the 28% slab, there should only be the so-called sin and demerit goods (the consumption of which is discouraged through high tax rates)". Eight items that were in the 12% tax band, such as finished leather and fishing net, are now subject to 5% GST, while six in the 5% bracket, including certain dried vegetables like sweet potatoes, are now tax-free.
A total of 13 items, including condensed milk, refined sugar, curry paste, which were originally in the 18% category will now be taxed at 12%. Outdoor catering will also be taxed at 18 per cent along with ITC. Rate on pasta, jute and cotton hand bags has been cut to 12 percent from 18 percent.