45th GST Council Meeting’ Highlights

About

The 45th GST Council meeting chaired by Finance Minister Nirmala Sitharaman held on 17th September 2021, at Lucknow, Uttar Pradesh. The Council meeting was held physically for the first time after one and a half years of virtual meetings. It was attended by Minister of State for Finance and Corporate Affairs Anurag Thakur and the finance ministers of states and Union Territories (UTs) along with senior officials of the Government of India.

The main themes on the agenda were Reducing taxes on life-saving medicines, bringing petrol and diesel under the scope of indirect tax, rationalization of the structure of inverted duty, and treating food delivery apps as restaurant services. Various “quite a few people-friendly decisions” have been made which are as follows

Key Highlights

➤ The concessions on drugs used for COVID-19 treatment which include Amphotericin B (nil rate), Remdesivir (5% rate), Tocilizumab (nil rate) and anti-coagulants like Heparin (5% rate), have been extended till 31st December 2021. The list of drugs has been expanded and now includes Itolizumab, Posaconazole, Infliximab, Favipiravir, Casirivimab & Imdevimab, 2-Deoxy-D-Glucose, Bamlanivimab and Etesevimab, all now taxed at 5% GST.

➤ Cancer-related drugs (Keytruda being one of them) has got reduction of rate of 7% from 12% to 5%.

➤Various life-saving expensive drugs such as Zolgensma and Viltepso used to treat muscular atrophy are exempted from GST. Further, drugs suggested by the Ministry of Health for treating the same, imported for personal use, are exempted from IGST.

➤ GST rate on retro fitment kits used by disabled persons is now reduced to 5%.

➤ GST rate on fortified rice kernels used for ICDS is reduced from 18% to 5%.

➤ GST rate on bio-diesel supplied to oil marketing companies reduced from 12% to 5%.

➤ The transport of goods exported by vessels and air exempted from GST until 30th September 2022.

➤ Skill development training programmes (wholly/substantially) which are funded by Central and state governments are exempted from GST. Programmes where the Central Government or state government bear 75% of the cost of such training or higher will get exemption from GST.

➤ Specified renewable energy devices that are presently at 5% have inputs charged at 18%. Hence, corrections have been made. A GST rate of 12% has been prescribed on those energy devices.

➤ NPF for granting permits to goods carriages to operate throughout Indian and contiguous states has been exempted from GST.

➤ In order to correct the inverted tax structure, GST on railway parts and locomotives falling under Chapter 86 increased from 12% to 18%

➤ Petrol and diesel will not be brought under the GST regime yet.

➤ The revenue-neutral rate at the time of the introduction of GST was 15.5%. The same has been brought down to 11.6%.

➤ In order to avoid double taxation, the import of aircraft and other goods on lease are now exempted from IGST. Necessary amendments will be made to customs laws as well. Lessors located in SEZ paying GST under forward charge are also exempted.

➤ The correction in the footwear and textile sector anomalies regarding the issue of the inverted duty structure will take place from 1st January 2022.

➤ Inverted tax structure due to the royalty used as input services with regard to ore concentrates and specified metals that were being charged at 18% GST is now corrected but date of its implementation has not yet been decided.

➤ All kinds of pens and their parts will be taxed at 18% GST.

➤ The compensation cess collection will be extended beyond July 2022. To repay the total amounts borrowed last year and this year to pay the states, the compensation cess will be extended to March 2026.

➤ A Group of Ministers (GoM) has been formed to look into e-way bills, compliances, FASTags, use of technology, compensation cess, plugging of loopholes, and other issues. Another GoM has been formed to look into the rate rationalisation of certain goods and services.

With regard to food delivery apps, the e-commerce operators will be liable to pay the tax on restaurant services provided through them, with some exceptions.

GST rate on services 

➤ Coaching services which are provided to students by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities' are now exempt from GST.

➤ Renting of vehicle by State Transport Undertakings and Local Authorities is covered by expression ‘giving on hire’ are now under GST exemption

➤ The services by way of grant of mineral exploration and mining rights will have a GST rate of 18% .

➤ Admission to amusement parks having rides etc. attracts a GST rate of 18% and admission to such facilities that have casinos etc will have a GST rate of 28%

➤ Human consumed alcoholic liquor is “not food and food products” for the purpose of the entry prescribing 5% GST rate on job work services in relation to food and food products.

➤ The services by cloud kitchens or central kitchens are covered under ‘restaurant service’, and attract 5% GST without Input Tax Credit.

➤ Ice cream parlors sell already manufactured ice- cream. Such supply of ice cream by parlors would attract GST at the rate of 18%.

➤ The overloading charges at toll plaza are exempt from GST being akin to toll.