Restaurants fall in line on GST

Maharashtra to launch GST helpline, tells hoteliers to fall in line or face action

Maharashtra to launch GST helpline, tells hoteliers to fall in line or face action

A number of goods including daily-use products like toiletries and furniture will become cheaper with the revised GST rates for over 200 items coming into effect on Wednesday.

Responding to the court's query, counsel for the Goods and Services Tax Council told the court that if GST on sanitary napkins is reduced, it would apply even for the raw material involved, which will increase the input tax credit due to addition of financial cost in form of interest burden, hence put local manufacturers at a disadvantage in comparison with importers. "Thus, we decided that restaurant industry will not get the benefit of ITC", Finance Minister Arun Jaitley had said. Earlier, the tax rate at 18 per cent for air-conditioned eateries and those with liquor licences and 12 per cent for non-air-conditioned restaurants.

The Delhi High Court on Wednesday questioned the central government's decision to impose 12 per cent tax on sanitary napkins under the GST regime, saying it has exempted "bindi, kajal, sindoor" which seem more essential than sanitary napkins. It's a different matter that they argued before the government that the overall benefit from ITC was only 1%, which the government believed added up to 6% - a figure that now tallies with the calculation being dished out by some of the chains.

The council said the restaurants, however, did not pass on the input tax credit (ITC) to customers and so the ITC facility is being withdrawn and a uniform 5 per cent tax is levied on all restaurants without the distinction of AC or non-AC. Outdoor catering will also be taxed at 18 per cent along with ITC. And the restaurants which charged Rs 7,500 or more per day will now be levied with 18% goods and services tax.

Meanwhile, hotel owners demanded that it is necessary to decrease compound tax from 5 per cent to 2 per inorder to reduce the price rate. The plea sought quashing of the imposition of 12% GST on sanitary napkins, and declaring them to be liable to a "nil" rate or a reduced rate. "This will help restaurants across India rationalise tariffs", FHRAI president Garish Oberoi had said.

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