A group of ministers (GoM) has been set up under Assam Finance Minister Himanta Biswa Sarma to make the composition scheme more attractive and also revisit GST rates on restaurants. The GST Council, chaired by Finance Minister Arun Jaitley and consisting of his state counterparts, had on Friday constituted the GoM, which will submit its report within 2 weeks.
The other members of the GoM are Bihar Deputy Chief Minister Sushil Modi, Jammu and Kashmir Finance Minister Haseeb Drabu, Punjab Finance Minister Manpreet Singh Badal and Chhattisgarh Minister of Commercial Taxes Amar Agrawal, according to an office memorandum. With only 15.50 lakh businesses out of the total 98 lakh registered under the goods and services tax (GST) regime opting for the composition scheme, the GST Council has decided to set up the GoM to examine measures to make it more attractive.
Businesses with turnover of up to Rs 1 crore can opt for the composition scheme and they can pay taxes in the range of 1-5 per cent and file returns quarterly. The GoM has also been tasked with revisiting the tax structure of different categories of restaurants with a view to rationalising or reducing the rates. Currently, GST is levied at 12 per cent on non-AC restaurants while it is 18 per cent in air-conditioned ones.
The GoM will examine whether the AC restaurants pass on the benefit of cost reduction under GST to consumers and if they are not, whether they should be disallowed input tax credit claims. To make the composition scheme more attractive, the GoM would look into whether turnover of exempted goods can be excluded from the total turnover threshold for levying tax under the composition scheme.
Also, whether the scheme can be extended to taxpayers dealing in inter-state supplies of goods. Besides, the panel will look at whether the manufacturers opting for the scheme can be given the benefit of input tax credit.
The GST Council, in its last meeting, hiked the threshold for availing of the composition scheme to Rs 1 crore, from the Rs 75 lakh set earlier. The tax rate for traders of goods in the composition scheme is 1 per cent while it is 2 per cent for manufacturers and 5 per cent for restaurants.