New Delhi: Federal tax body the Goods and Services Tax (GST) Council has set up a five-member panel of state ministers to make the quarterly tax filing and payment scheme for small businesses more attractive and to rework the tax rate on restaurants.

The panel comprises Assam finance minister Himanta Biswa Sarma, Bihar deputy chief minister Sushil Kumar Modi, Jammu & Kashmir finance minister Haseeb Drabu, Punjab finance minister Manpreet Singh Badal and Chhattisgarh commercial taxes minister Amar Agrawal, a person privy to the development said on the condition of anonymity.

At present, services of non-air-conditioned restaurants are taxed at 12% and that of air-conditioned ones including those in five star and above rated hotels are taxed at 18%.

The Council has noticed that restaurants have not passed on the benefit of tax rebate available to them for various materials and services that they use.

The panel was announced on Friday by finance minister and GST Council chairman Arun Jaitley. It will examine whether items that are exempted from GST need not be counted while determining the eligibility for firms to sign up for the ‘composition scheme’.

The scheme allows restaurants, small manufacturers and traders to pay a marginal GST rate and file tax returns every quarter. The Council, which met in the capital on Friday, decided to raise the eligibility threshold from Rs75 lakh to Rs1 crore.

Businesses making inter-state supply of goods are not eligible for the composition scheme at present, although those making inter-state services can sign up for it as per Friday’s Council decision. The panel will examine if businesses making inter-state trade in goods too should be allowed. It will also examine how large businesses sourcing goods and services from small enterprises which pay taxes and file returns quarterly can avail of monthly tax rebates.

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