On September 17, 2021, the 45th meeting of GST (Goods & Service Tax) Council was held at Lucknow, Uttar Pradesh, under the chairmanship of the Union Minister Nirmala Sitharaman, Ministry of Finance.
- The Council has made the various recommendations related to extension of existing concessional GST rates on certain COVID-19 treatment drugs, reduction of GST rates on various other medicines, revision and clarification of GST rates of various Goods and Services, several measures relating to GST Law & Procedures, etc.
Following is the compiled a list of Key Recommendations:
I.Recommendations relating to GST rates on Medicines
i.The existing concessional GST rates (till 30th September, 2021) on Covid-19 treatment drugs extended to December, 31 2021.
- The drugs covered under this are Amphotericin B (nil), Remdesivir (5%), Tocilizumab (nil), and Anti-coagulants like Heparin (5%).
ii.There will be a reduction of the GST rate to 5% for 7 Covid-19 treatment drugs up to December, 31 2021.
- The drugs taken under this consideration are Itolizumab, Posaconazole, Infliximab, Favipiravir, Casirivimab & Imdevimab, 2-Deoxy-D-Glucose, and Bamlanivimab & Etesevimab.
iii.There will also be a reduction in the GST for the medicine Keytruda, used for the treatment of cancer, to 5% from 12%.
iv.The concessional tax for medical equipment will end on September 30, 2021.
v.The existing 12% IGST on import of medicines Zolgensma for spinal muscular atrophy; Viltepso for Duchenne muscular dystrophy; and other medicines used in treatment of muscular atrophy is waived. These drugs cost up to Rs 16 crore.
II.Recommended rate changes in relation to Goods w.e.f. October 1, 2021:
The increase in GST rate will help mines and industries to adjust their accumulated Input Tax Credit (ITC) due to inverted duty structure, which was otherwise not eligible for refund.
GST Rate on following goods to be increased:
i.Increase of 5% to 18% on ores and concentrates of metals such as iron, copper, aluminum, zinc and few others; waste and scrap of polyurethanes and other plastics.
ii.Increase of 12/18% to 18% on Cartons, boxes, bags, packing containers of paper, and kinds of pens from 12/18% to 18%.
iii.Increase of 12% to 18% on Railway parts, locomotives & other goods in Chapter 86; and miscellaneous goods of paper like cards, catalogue and printed material (Chapter 49 of tariff) .
iv.Increase of 5% to 12% for Specified Renewable Energy Devices and parts.
GST Rate on following goods to be decreased:
i.GST rate reduced to 5% on Retro fitment kits for vehicles used by the disabled
ii.GST rated reduced to 5% from 12% for Fortified Rice Kernels, Biodiesel supplied to OMCs (Oil marketing companies) for blending with Diesel.
iii.IGST (Integrated Goods and Services Tax) exemption has also been given on goods supplied at the Indo-Bangladesh border haats.
i.Supply of mentha oil from unregistered persons has been brought under reverse charge. It export with payment of IGST and getting refund of the same will not be allowed.
ii.Brick kilns would be brought under special composition scheme with threshold limit of Rs. 20 lakhs w.e.f. April 1, 2022.
- There will be a 6% GST rate on Bricks without ITC under the scheme. GST rate of 12% with ITC would otherwise apply to bricks.
iii.The Correction in Inverted Duty structure in Footwear and Textiles sector will be implemented from January 1, 2022 i.e. new footwear and textile rates.
iv.Carbonated fruit beverages and carbonated beverages with fruit juice will attract a GST rate of 28% plus compensation cess of 12%.
v.Brewers’ Spent Grain (BSG), Dried Distillers’ Grains with Soluble [DDGS] and other such residues, falling under HS code 2303 attract GST at the rate of 5%.
III.Recommended rate changes in relation to Services w.e.f. October 1, 2021:
i.From January 1, 2022, food delivery apps will collect and deposit 5% GST with the government, in place of restaurants, for deliveries made by them. This will not affect the end consumer.
ii.Ice cream parlor that sells already manufactured ice- cream will attract GST at the rate of 18%.
iii.Admission to amusement parks having rides etc. attracts a GST rate of 18%.
iv.There is an increase in GST rate to 18% from 12% for Licensing services/ the right to broadcast and show original films, sound recordings, Radio and Television programmes; and for printing and reproduction services of recorded media where content is supplied by the publisher.
v.The GST is reduced to NIL from 18% for Services by way of grant of National Permit to goods carriages on payment of fee; Skill Training for which Government bears 75% or more of the expenditure; Services related to AFC Women’s Asia Cup 2022.
vi.Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities” is exempt from GST.
i.Validity of GST exemption on transport of goods by vessel and air from India to outside India is extended upto September 30, 2022.
ii.The regime of paying compensation to states for revenue shortfall due to subsuming their taxes in the uniform GST, will end in June 2022.
- The cess which is currently levied on top of the GST rate on certain luxury and sin goods to fund the compensation amount for states will continue to be levied till March 2026.
iii.The services by way of grant of mineral exploration and mining rights attracted GST rate of 18% w.e.f. July 1, 2017.
IV.Recommendations relating to GST law and procedure:
i.Requirement of filing FORM GST ITC-04 under rule 45 (3) of the CGST Rules are relaxed as follows:
- Taxpayers whose annual aggregate turnover in preceding financial year is above Rs. 5 crores will fill ITC-04 once in six months
- Taxpayers whose annual aggregate turnover in preceding financial year is upto Rs. 5 crores will fill ITC-04 annually
ii.Unutilized balance in CGST and IGST cash ledger can be transferred between distinct persons (entities having same PAN but registered in different states), without going through the refund procedure, subject to certain safeguards.
iii.There is no need to carry the physical copy of tax invoice in cases where invoice has been generated by the supplier in the manner prescribed under rule 48(4) of the CGST Rules, 2017.
iv.Only those goods which are actually subjected to export duty will be covered under the restriction imposed under section 54(3) of CGST Act, 2017 to avail refund of accumulated ITC.
v.Rule 59(6) of the CGST Rules to be amended with effect from January 1, 2022.
V.Setting up of GoM:
i.The Council decided to set up a Group of Ministers (GoM) to examine the issue of correction of inverted duty structure for major sectors; rationalize the rates and review exemptions from the point of view of revenue augmentation, from GST.
ii.It also decided to set up a GoM to discuss ways and means of using technology to improve compliance through improved e-way bill systems, e-invoices, and FASTag data.
iii.Both the GoMs will submit their reports in two months.
About GST Council:
As per Article 279A (1) of the amended Constitution, the GST Council was constituted by the President within 60 days of the commencement of Article 279A (September 12, 2016).
- The First Meeting of the council was held on September 22-23, 2016 in New Delhi
- It is chaired by the Union Finance Minister and includes representatives from all states and UTs.
Recent Related News:
i.The GST Day is annually observed across India on 1st July. The day marks the commemoration of the unprecedented reform of Indian taxation – GST. The year 2021 marks the observance of the 4th GST Day.
ii.On July 09, 2021, the Department of Financial Services (DFS), Ministry of Finance, removed the position of chairman from the IPO (Initial Public Offer) bound – Life Insurance Corporation of India (LIC) and it will have Managing Director (MD) and Chief Executive Officer (CEO), by making amendments over the LIC Act 1956.
About GST (Goods & Service Tax):
It is an indirect tax which has replaced various indirect taxes in India such as the excise duty, VAT, services tax, among others. It has 3 components:
i.CGST(Central Goods and Services Tax) – tax collected by the Central Government on an intra-state sale.
ii.SGST(State Goods and Service Tax) – tax collected by the state government on an intra-state sale.
iii.IGST(Integrated Goods and Services Tax) – tax collected by the Central Government for an inter-state sale.