Tuesday, October 26, 2021
HomeFinanceGST Council rejigs some rates, extends cess levy, petroleum still out

GST Council rejigs some rates, extends cess levy, petroleum still out

The GST Council on Friday decided to provide relief on Covid-related items by extending the concessional rate of duty on medicines for it upto December 31, 2021, while taking no decision on bringing petroleum products under its ambit, saying it was not the right time yet.

It also decided to correct inverted duty structure in footwear and textile sectors while deciding to treat food delivery apps such as Zomato and Swiggy as restaurants, thereby, becoming responsible to pay 5 per cent GST on supplies made by them. However, the new system will not make meals dearer since no new tax component has been added.

The Council, which met in Lucknow in physical form for the first time since the outbreak of Covid pandemic, did discuss inclusion of petroleum products under GST on the directions of the Kerala High Court but decided that it was not the right time to undertake this change, Finance Minister Nirmala Sitharaman said after the meeting.

Briefing the media after the meeting, she said: “We have taken a few people friendly decisions….”

Sitharaman also said that the Council has granted tax exemption on drugs to treat muscular atrophy imported for personal use only, and reduced the duty on drugs for cancer treatment from 12 per cent to 5 per cent.

Besides, the Council exempted the IGST on imports of leased aircrafts and on exports of goods by vessel or air till September 30, 2022.

However, it increased GST on railway parts, locomotives and other goods to 18 from 12 per cent.

It also discussed the compensation formula agreed for states to meet their revenue shortfall on account of the GST and decided that the Centre would continue to levy compensation cess beyond the stipulated five years period ending July 2022 to upto March 2026 to pay back the loans taken to meet the shortfall in FY21 and FY22.

With regard to Covid relief medicines, the concessional GST rate, valid till September 30, had been extended to December 31 for Amphotericin B (used for treating black fungus), Remdesivir, Tocilizumab, and anti-coagulants like Heparin.

Besides, reduced GST rate of 5 per cent will also be available till December 31 in the case of Covid-19 treatment drugs, namely : Itolizumab, Posaconazol, Infliximab, Favipiravir, Casirivimab & Imdevimab, 2-Deoxy-D-Glucose, Bamlanivimab, and Etesevimab.

The Council also decided to reduce rate on supply of biofuel to oil companies from 12 to 5 per cent while raising duty on a host of ores and concentrates of metals such as iron, copper, aluminum, zinc and few others from 5 to 18 per cent to correct the duty anomaly.

Moreover, brick kilns would be brought under special composition scheme with threshold limit of Rs 20 lakhs with effect from April 1, 2022. Bricks would attract GST at the rate of 6 per cent without ITC under the scheme, and a 12 per cent with ITC would otherwise apply to bricks.

In order to correct inverted duty structure, in footwear and textiles sector, as was discussed in earlier GST Council Meeting and was deferred for an appropriate time, the Council decided it will be implemented with effect from January 1, 2022.

On the issue of compensation scenario, a presentation was made to the Council wherein it was brought out that the revenue collections from Compensation Cess in the period beyond June 2022 till April 2026 would be exhausted in repayment of borrowings and debt servicing made to bridge the gap in 2020-21 and 2021-22. In this context, various options, as have been recommended by various committees/forums were presented, and the Council deliberated at length on the issue.

Sitharaman said the Council decided to set up a GoM to examine the issue of correction of inverted duty structure for major sectors, and rationalise the rates, and review exemptions from the point of view of revenue augmentation, from GST.

It was also decided to set up a GoM to discuss ways and means of using technology to further improve compliance including monitoring through improved e-way bill systems, e-invoices, FASTag data and strengthening the institutional mechanism for sharing of intelligence and coordinated enforcement actions by the Centre and the States.

- Advertisment -
spot_img

Most Popular