Lok Sabha Question No. 2969 (UNSTARRED), answered on 2018-08-03
Subject: GST on Eateries and Small Traders
Ministry: FINANCE
Asked by: PREM SINGH CHANDUMAJRA, BHOLA SINGH

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA

## UNSTARRED QUESTION NO.2969

## TO BE ANSWERED ON FRIDAY THE 03 RD  AUGUST, 2018 SHRAVANA 12, 1940 (SAKA)

## GST ON EATERIES AND SMALL TRADERS

## 2969.  PROF. PREM SINGH CHANDUMAJRA: SHRI BHOLA SINGH:

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 accrue 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): Yes. Changes have been made in GST Law and rates of taxation from time to time in various GST Council meetings including reduction of GST rates on eateries and flat rates for small traders. These changes have been made to improve ease of doing business and to make goods and services affordable to the common man.

(b): Till 1st August, 2018, changes in GST Law and rate structure have been notified through following number of notifications issued under CGST Act, IGST Act, UTGST Act and GST (Compensation to States) Act:-

| Year                     |   2017 |   2018 |
|--------------------------|--------|--------|
| Central Tax              |     75 |     30 |
| Central Tax (Rate)       |     47 |     21 |
| Integrated Tax           |     12 |     01 |
| Integrated Tax (Rate)    |     50 |     22 |
| Compensation Cess        |     01 |     00 |
| Compensation Cess (Rate) |     07 |     02 |

Corresponding  notifications  have  been  issued  by  the  States  under  the  respective SGST Acts. These notifications are available on the e-gazatte of Govt. of India.

Specific to eateries and small traders, in the 23rd GST Council Meeting held on 10th November  at  Guwahati,  Assam,  for  Agenda  item  9,  the  Council  approved  the

- following:1. All stand-alone restaurants irrespective of being air conditioned or otherwise, shall attract  tax  at  the  rate  of  5%  without  input  tax  credit.  Food  parcels  (or  takeaways) from restaurants shall also attract tax at the rate of 5% without input tax credit. 2.  To  levy  a  uniform  rate  of  tax  at  the  rate  of  1%  under  composition  scheme  for manufacturers and traders. The turnover for traders shall be counted only for supply

of taxable goods.

Such  reduction  in  tax  rates  on  eateries  and  small  traders  led  to  reduction  in compliance burden on taxpayers leading to voluntary compliance and expansion of tax  base.  The  amount  paid  by  customers  in  the  eateries  has  decreased  due  to reduced GST and has benefitted the consumers in general.

(c) and (d): No. The estimated revenue loss of reducing the tax rate for restaurants from 18% to 5% without input tax credit would be about Rs. 5,000 crores. The gross GST  revenue  collection  in  the  month  of  June  2018  is  Rs.  95,610  crore  whereas monthly average of GST collection in the last financial year was Rs. 89,885 crore. Therefore, GST revenue collection is improving in the FY 2018-19.

Hence, the move has not lowered the tax collection in the country.

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