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The Goods & Services Tax (GST) Council, at its meeting on Friday, is likely to revise rates on outdoor catering services and matchsticks and raise the threshold for levying 28 per cent on hotel room tariff.
However, a change in rate for biscuits and a rate reduction on automobiles is unlikely.
The hotel industry has a four-tier rate structure based on the daily room tariff: ‘Nil’ for tariff below ₹1,000 per day; 12 per cent for tariff above ₹1,000 but less than ₹2,500; 18 per cent for tariff of ₹2,500 and above but less than ₹7,500; and 28 per cent for tariff above ₹7,500.
Higher thresholds
A senior government official said Rajasthan, Goa and a few other States have suggested that the threshold for the maximum GST rate should go up.
Accordingly, the Council could consider raising the tariff threshold from ₹7,500 to, say, ₹10,000 or more for 28 per cent GST. Similarly, the ceiling for 18 per cent GST rate could also go up.
Catering to offices
Supply of food/drinks in outdoor catering attracts 18 per cent GST. Many offices get food supply from outside caterers, and they therefore have to pay 18 per cent GST even for non air-conditioned canteens.
The Authority for Advance Rulings (AAR) and the Appellate Authority for Advance Rulings (AAAR) have been unyielding on levying 18 per cent GST.
However, many companies have sought some relief, and the GST Council will likely consider lowering it.
Another item that could see rate revision is matches.
As of now, handmade safety matches are taxed at 5 per cent, while all other types of matches are taxed at 18 per cent. The plan now is to levy a uniform 12 per cent for all categories of matches.
Although the biscuit industry has sought differential rate for biscuits priced below ₹100 per kg, the official made it clear that there will be no change. All types of branded biscuits attract 18 per cent GST.
On the automobile sector, the official explained that considering the recommendation of the fitment committee, any change is unlikely. But the proposal will be discussed at the meeting.
As of now, barring e-vehicles, all cars attract GST at 28 per cent plus cess. Considering the sharp deep slowdown in automobile sales, there is a strong demand for a rate cut.
Annual return
The Council will also consider exempting businesses with a turnover of up to ₹2 crore from filing annual return for financial year 2017-18.
Even though simplification of return forms is not part of the formal agenda, the States will raise the issue in respect of bigger assessees, arguing that it would improve compliance.
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