Based on the various representations received from the trade and industry, the GST Council has recommended a number of measures pertaining to change in Goods and Services tax rate and policy including the GST rates on eateries and small traders. Some of these decisions which have been implemented by the issuance of the requisite notifications and circulars are detailed below:
Rationalization of GST Policy measures:
Rationalization of GST Rates of Goods and Services:
The GST rates on goods and services were fitted into 5 slabs i.e. Nil, 5%, 12%, 18% and 28%, largely based on the pre- GST cumulative indirect tax incidence both of Central and State taxes, including the embedded taxes, which are subsumed in GST, so as to ensure revenue neutrality. These rates were recommended by the GST Council in its 14th and 15th meeting held on 18.05.2017 and 03.06.2017 respectively.
Subsequent to notification of these rates a number of representations were received from the trade and industry regarding GST rates on goods and services. Based on these representations the GST Council reviewed the rates on goods and services in its subsequent meetings including GST rates on eateries which has been reduced from 18% with ITC to 5% without ITC, including a restaurant located in the premises of a hotel having unit of accommodation with declared tariff below Rs. 7500/-.
The changes in the GST rate structure and policy have been recommended by the GST Council keeping in view the representations received from trade and industry and the interests of consumers and the same are expected to benefit the overall economy and consumers.
The revenue loss on account of the rationalization / reduction in GST rates, at the same levels of economic activity, is roughly expected to be of the order about Rs. 29,000 Crore in a full year. This is expected to be off-set by increased economic activity, amalgamation of GST rates, easing of procedural complications and less litigation, leading to greater revenue collection.
This was stated by Shri Shiv Pratap Shukla, Minister of State for Finance in a written reply to a question in Lok Sabha today.