November 15, 2017

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Eating out becomes cheaper after GST cuts

Starting from 15th November, your bills for eating in hotels and restaurants would not cost much any longer. After the recent meeting of the GST council that took place in Guwahati and led to a large number of items witnessing a cut in the tax rate, eating out will liable to just 5% of tax, as compared to the earlier 12% and 18%.

The 5% tax slab is applicable on both A/C and non- A/C restaurants. According to the finance minister, the benefit of the Input Tax Credit should be passed on to customers. Till now the restaurants had not been passing this to the customers even when charging a 12% or 18% tax from them. Now this ITC has been removed altogether, thus imposing a tax slab of 5%.

Image result for gst tax cuts
Image Source - Business Standard

For the hotels where per night room tariff is RS 7500 or more, 18% GST will be applicable and they will also have ITC. However, for hotels with room tariff less than Rs 7500, there will be no ITC and only 5% GST will be applicable.

In the recent meeting of GST council, a majority of products from the 28% bracket were brought in the 12% bracket further six items from the 18% bracket were brought in the 5% bracket, 8 items in the 12% bracket were brought to 5%, and six items from 5% to nil.  


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