GST Council Meeting Highlights: Tax relief on Anti-Covid Life-Saving Drugs and More
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The 45th meeting of the GST (Goods and Services Tax) Council convened in Lucknow on 17th September 2021 and was chaired by Finance Minister Nirmala Sitharaman. The Council has convened in-person for the first time since the Covid-19 pandemic began almost 2 years ago. The Council’s agenda addressed a variety of pressing issues and key themes including the reduction in taxes on life-saving medicines, expanding the ambit of indirect tax to cover petrol and diesel, and considering food delivery applications as restaurant services.
Here are the proposals for the people-friendly changes brought in by the GST Council’s meeting.
GST Council Meeting Highlight #1: Concessions in the Medical Sector
FM Sitharaman’s announcement of offering tax concessions to certain life-saving drugs kickstarted the Council meeting. The GST Council decided to exempt Amphotericin B and Tocilizumab from the purview of GST until 31st December 2021. The concessional rates of GST offered to certain Covid-related drugs was extended from 30th September to 31st December 2021. The concessions apply only to medicines and not medical equipment.
Drugs used in treatment for Covid-19 such as Remdesivir and anticoagulants including Heparin are subject to a concessional rate of GST at 5% while Amphotericin and Tocilizumab are fully exempted. Itolizumab, Posaconazole, Infliximab, Bamlanivimab and Etesevimab, Casirivimab and Imdevimab, 2-Deoxy-D-Glucose and Favipiravir are the seven additional drugs whose GST is reduced to 5% from 12% until 31st December 2021. Some incredibly expensive Covid-19 life-saving drugs are exempt from GST including Zolgngelsma and Viltepso that cost lakhs of rupees.
A reduction in GST to 5% on retro-fitment kits for vehicles used by those with disabilities was announced. The list of drugs suggested for treating muscular atrophy by the Health Ministry is exempted from IGST (Integrated Goods and Services Tax). Apart from this, drugs used for the treatment of cancer such as Keytruda will be taxed at 5% instead of 12%.
GST Council Meeting Highlight #2: Petrol and Diesel
No decision was made about the long-awaited proposal of bringing petrol and diesel under the purview of GST. FM Sitharaman categorically states this wasn’t the right time to make such a decision. She also mentioned that it was due to Kerala High Court’s order that this matter was brought before the GST Council. The Council is yet to present its rationale to the Court.
Revenue buoyancy is the primary concern raised by states opposing the inclusion of fuels to the GST list. GST was introduced in 2017, and five commodities are exempted from it including petrol, diesel, natural gas, crude oil, and aviation turbine fuel (ATF) because of the central and state governments’ dependence on them.
GST Council Meeting Highlight #3: Food Delivery Apps and Platforms
E-commerce operators such as Zomato and Swiggy are liable to pay GST on restaurant services they provide, and the said tax will be charged at the point of delivery. This announcement put to rest all rumors about new taxes being introduced for food delivery platforms. The place where the food is delivered will be the point of tax collection when it comes to operators and gig offices like Swiggy. The said operators who are collecting the tax are liable to pay GST on it. Food delivery applications must collect 5% GST from the consumers instead of the restaurants listed with them.
The restaurants were earlier bearing the tax burden that will now be borne by aggregators such as Swiggy and Zomato. As such, the final consumers don’t have to pay any additional taxes.
Other Key Points Discussed in the GST Council Meeting
Apart from the above-mentioned amendments proposed by the Council, here are the other highlights of the meeting.
• Two groups of ministers to look into proposed GST amendments:
One group is responsible for submitting a report on rate rationalization issued within two months, while the other group will look into issues associated with technology, compliance, FASTags, e-way bills, and composition schemes.
• GST compensation Cess Deadline Extended:
The GST compensation cess has also been extended until March 2026.
• GST rate for railway parts and locomotives Increased:
The GST rate for railway parts and locomotives is increased from 12% to 18%.
• GST for Fortified rice kernels used in Integrated Child Development Services Scheme Revised:
The revised GST for Fortified rice kernels used in Integrated Child Development Services Scheme is 5% instead of 18%.
• Inverted Duty Scheme on Textile and Footwear Corrected:
From 1st January 2022, the inverted duty scheme on textile and footwear will be corrected.
• GST rate on biodiesel to OMCs reduced:
The GST rate on biodiesel that’s supplied to Oil Marketing Companies (OMCs) to be blended with diesel is reduced to 5% from 12%.
• National permit fee for operating goods carriage exempted from GST:
The national permit fee charged by states for operating goods carriage is now exempt from the purview of GST.
•Specific renewable devices to attract GST:
Specific renewable devices will attract a 12% GST. Pens will be taxed at 18% single GST.
The suggested amendments to GST and other GST Council meeting highlights are a step in the right direction. The new changes aim to create anti-evasion systems needed for transparent payments and disbursements of GST in the country.