Demand to slash GST rate on catering yet to be met as issue not discussed in meet


Bengaluru: Those wishing to spend less on weddings, birthday parties and other events will have to wait for some more time as the demand for reduction of Goods and Services Tax (GST) rate on outdoor catering is yet to be fulfilled.

The GST Council, which met on Thursday, didn’t take up the issue of tax rates on outdoor catering service. Caterers and hoteliers from across the country are urging the Centre to reduce GST rates on the service from 18% to 5%.

“Union finance minister Nirmala Sitharaman is receptive and we hope our demand will be met soon,” said PC Rao, secretary of Bengaluru Hoteliers Association, who was part of a delegation that submitted a memorandum to Sitharaman on Wednesday.

“We are in a piquant situation after GST rates on hotels were slashed. The food served in restaurants attracts 5% GST and people have to pay 18% for the same food when it’s served in the party hall of the same restaurant. We have brought this anomaly to the finance minister’s notice, which she obliged to look into,” said Rao.

The delegation, which was stationed in New Delhi on Thursday, has been assured that the issue would be looked into. Caterers expect the GST Council to take it up at its next meeting in August. “It was not on the agenda for this month’s meeting. The issue may be considered for discussion if the proposal comes from state governments,” said an official who attended the meeting.

“We are planning to meet finance ministers of all states through representatives of our local units,” said K Shamaraju, president of South India Hoteliers Association.

If the Centre obliges to rationalise tax rates, it would also benefit employers and employees of private companies which run canteens operated through catering service providers. Apart from caterers, food coupon providers and companies providing food and beverages to employees are also seeking reduction in tax rates.

“Lower tax rates, especially in sectors of mass consumption, are always welcome since they help in enhancing tax compliance. Hence, the government may consider the proposal,” said BT Manohar, member of the GST advisory council of Karnataka government.

Last year, hoteliers had fought for lower taxes in the hotel industry, and thanks to their efforts, the GST Council obliged to reduce tax on food sold in hotels and restaurants to 5% without the benefit of input tax credit. Hotels with an annual turnover less than Rs 1.5 crore are eligible for composition tax (CoT) scheme, wherein they pay 5% of their turnover, which is not collectible from consumers.

Earlier, hotels with air conditioners were attracting 18% tax and those without AC 12%.

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