Lok Sabha Question No. 3615 (UNSTARRED), answered on 2018-03-16
Subject: GST Rates on Eateries and Small Traders
Ministry: FINANCE
Asked by: BHOLA SINGH, PREM SINGH CHANDUMAJRA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA

## UNSTARRED QUESTION NO.3615

## TO BE ANSWERED ON FRIDAY THE 16 TH  MARCH, 2018 PHALGUNA 25, 1939 (SAKA)

## GST RATES ON EATERIES AND SMALL TRADERS

## 3615.  SHRI BHOLA SINGH: PROF. PREM SINGH CHANDUMAJRA:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has made large scale changes in Goods and Services Tax  (GST)  including  reduction  of  GST  rates  on  eateries  and  flat  rates  for  small traders as suggested by the States;
- (b) if so, the details thereof and the benefits to be accrued therefrom;
- (c) whether this move would lower the tax collection in the country; and
- (d) if so, the details thereof and the steps proposed to cover this deficit?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SHIV PRATAP SHUKLA)

(a) & (b): 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:

- i. Increase in  the  aggregate  annual  turnover  threshold  for  eligibility  under  the composition  scheme  from  Rs.  75  lakh  to  Rs.  one  crore  for  27  States  (including Jammu & Kashmir and Uttarakhand).
- ii. Increase in  the  aggregate  annual  turnover  threshold  for  eligibility  under  the Composition scheme from Rs. 50 lakh to Rs. 75 lakh for Special Category States (as specified in sub-clause (g) of clause (4) of article 279A of the Constitution) other than Jammu & Kashmir and Uttarakhand.
- iii. Taxpayers having annual turnover of up to Rs.1.5 crore in the previous year provided with an option to file quarterly Returns.
- iv. Registered  persons  making  supply  of  goods  to  make  payment  of  tax  on issuance of invoice and not at the time when advances are received.
- v. Suspension  of  the  application  of  reverse  charge  mechanism  under  Section 9(4) of the CGST/SGST Acts, 2017 and Section 5(4) of the IGST Act, 2017 till 31 March, 2018 for all categories of registered persons.
- vi. Uniform rate of tax @1% under Composition scheme for manufacturers and traders.  The  turnover  of  taxable  goods  to  be  considered  for  eligibility  for  the Composition scheme for traders.
- vii. Supply of exempted services by Composition taxpayer will be allowed and the same will not be taken into account while computing the aggregate turnover.
- viii. Amount of late fee payable for delayed filing of return in Form GSTR-3B by a taxpayer  whose  tax  liability  for  the  month  was  'Nil'  reduced  to  Rs.20/-  per  day (Rs.10/-  per  day  each  under  CGST & SGST Acts) subject to  maximum  Rs.5000/under each Act from October, 2017.
- ix. The amount of late fee payable for delayed filing of return in Form GSTR-3B by other taxpayers reduced to Rs. 50/- per day (Rs. 25/- per day each under CGST & SGST Acts) subject to maximum Rs.5000/- under each Act from October, 2017.
- x. The filing  of  returns  by  the  taxpayers  has  been  simplified  by  continuing  the GSTR-3B return up to March, 2018. The filing of FORM GSTR-2 and GSTR-3 has been kept in abeyance till further notice.

## 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  14 th and  15 th 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/-.

(c) &  (d): 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.

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