As many as 178 items of daily use were shifted from the top tax bracket of 28 per cent to 18 per cent, while a uniform 5 per cent tax was prescribed for all restaurants, both air-conditioned and non-AC, Finance Minister Arun Jaitley said after the GST Council meeting.
Eating out is expected to become cheaper as all restaurants outside high-end hotels charging up to Rs 7,500 per room have uniformly come under the 5 per cent GST bracket from Wednesday, according to the gazette notification.
The GST Council in its meeting on November 10 had made a decision to reduce rates of 178 items and put them in the 18% tax slab from the existing 28%.
The facility of input tax credit for restaurants has, however, been withdrawn as they had not passed on this benefit to consumers.
Last Friday the government, which is in the middle of elections in a couple of states including Modi's home state of Gujarat in December, announced plans to slash rates on several items across all tax slabs, easing the burden on consumers and businesses.
The revision in goods and services tax rates for the restaurants will have the positive impact on the bringing down dining-out cost.
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Earlier, since GST was introduced on July 1, air-conditioned restaurants levied 18 percent tax on food bills while non air-conditioned restaurants charged 12 percent. The rate for restaurants in starred hotel will remain 18 per cent along with the benefit of input tax credit. "Six goods have come down from the 18 percent slab to 5 percent, 8 items have come down from 12 percent to 5 percent and 6 items from 5 percent to zero tax", Jaitley said.
A total of 13 items, including condensed milk, refined sugar, curry paste, which were originally in the 18% category will now be taxed at 12%.
Also, tax on wet grinders and armoured vehicles was cut from 28 per cent to 12 per cent.
Just four months after it rolled out a new national goods and services tax regime, India has slashed rates on over 200 everyday products such as chewing gum, pasta, chocolate, beauty products and electrical plugs, in a move cheered by retailers.
Among mass consumption items watches, blade, stove, mattresses have been reduced to 18 percent from 28 percent.