The ministerial panel working to make GST composition scheme more attractive today suggested slashing tax rate to 1 per cent for manufacturers and restaurants, while easier norms for traders opting for it.
Currently, manufacturers and restaurants with turnover up to Rs 1 crore pay GST under composition scheme at 2 per cent and 5 per cent respectively. The same for traders is 1 per cent.
In its second meeting, the Group of Ministers, headed by Assam Finance Minister Himanta Biswa Sarma, today also suggested doing away with the tax rate distinction between AC and non-AC restaurants, those which are not covered under composition scheme, and tax them at 12 per cent with input credit.
It also suggested that eating out at hotels, which has room tariff of more than Rs 7,500, should attract an uniform 18 per cent tax rate instead of any separate category for 5- star hotel.
The GST Council, chaired by Union Finance Minister Arun Jaitley and comprising his state counterparts, on November 10 in Guwahati is likely to take up the recommendations of the GoM, which was set up earlier this month.
With regard to traders, the GoM suggested two pronged approach for taxation under the composition scheme.
It suggested that traders who want to exclude the sale proceeds of tax-free items from its turnover, it can pay 1 per cent GST (Goods and Services Tax). However, those traders who pay tax on total turnover, the tax rate has been proposed at 0.5 per cent.
For example, supposing a trader deals in goods which are tax exempt as well as those which are taxable under the GST and has a turnover of Rs 1 crore. Of this, Rs 40 lakh turnover is from sale of tax-exempt items and remaining Rs 60 lakh from taxable goods.
So, traders deciding to pay tax on total Rs 1 crore turnover can pay 0.5 per cent, while those wanting to pay tax on Rs 60 lakh can cough up 1 per cent GST.
"The GoM decided that tax rates under composition scheme for restaurants and manufacturers be lowered to 1 per cent.
For traders the ministerial group suggested two tax rates," an official told
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)