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GST Tax Structure May Compel Sweet Shops to Become Restaurants
December 10, 2018
The way GST tax slabs are arranged for the food industry today, sweet shops across the country have to pay taxes 13% higher than restaurants. Thus, unless the government revises the tax structure, the shop-owners may rebrand their establishments as “restaurants” which is rather easy to do for the massive tax benefits.
Under the GST regime, pastries and cakes are taxed at 18% GST and branded snacks are taxed at 12%. However, the GST rate for restaurants is fixed at a modest 5% which shows the huge disparity.
An interesting observation was made by the Authority of Advance Ruling, which said that if a restaurant is run alongside a sweet-shop in the same premises, then GST rate of 5% can be levied as the owner could say that the customers purchasing the cakes or pastries (attracting 18% GST) are inside the establishment for the restaurant.
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