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GST Council Meet: FM Nirmala Sitharaman To Review Rates, Extend Tax Concession To 11 COVID-19 Drugs

This is the first time in 20 months that the GST council will be doing any physical meeting

Lucknow: Finance Minister Nirmala Sitharaman chairs the 45th GST Council meeting in Lucknow, Friday, Sept. 17, 2021. (PTI)

New Delhi: The 45th GST Council meet, chaired by Finance Minister Nirmala Sitharaman, began in Lucknow on Friday. The crucial meeting, comprising state finance ministers, will decide on extending tax concession to 11 COVID-19 drugs and review tax rates of over 4-dozen items, like oncology medicine and coconut oil.

This is the first physical meeting after the one held on December 18, 2019. The GST Council has since then been meeting via video-conferencing due to the COVID-19 pandemic. Friday’s meeting does not have the provision of video conferencing and almost all state finance ministers, except Gujarat, are attending the meeting.

The council would also discuss the modalities of compensation payable to states from July 1, 2022. Also, taxing petrol and diesel under the single national GST tax.

It will deliberate on the proposal of extending the existing concessional tax rate structure on Amphotericin B, Tocilizumab, Remdesivir and anti-coagulants like Heparin, till December 31, 2021, from the present September 30.

Tax rate on Amphotericin B, Tocilizumab was cut to ‘Nil’, while Remdesivir and Heparin was reduced to 5 per cent in June 2021.

The council will on Friday also discuss the proposal of reducing GST from 12 per cent to 5 per cent to the seven more drugs till December 31, 2021.

These are Itolizumab, Posaconazole, Infliximab, Bamlanivimab and Etesevimab, Casirivimab and Imdevimab, 2-Deoxy-D-Glucose and Favipiravir.

To curb tax evasion, the proposal to make the food delivery platforms like Swiggy and Zomato liable to pay the Goods and Services Tax on restaurant services supplied through them would also be considered by the Council.

Once approved by the GST Council, food delivery apps will have to collect and deposit GST with the government, in place of restaurants, for deliveries made by them. There would be no extra tax burden on the end consumer.

As per estimates, tax loss to exchequer due to alleged underreporting by food delivery aggregators is Rs 2,000 over the past two years.

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In light of the Kerala High Court order, the council will also discuss taxing petrol and diesel under the GST, a move that may require huge compromises by both central and state governments on the revenues they collect from taxing these products.

In June, the Kerala High Court, based on a writ petition, had asked the GST Council to decide on bringing petrol and diesel within the GST ambit.

Also the interim report of a state-ministerial panel on capacity based taxation on pan masala and composition scheme for brick kilns and stone crushers would come up for discussion.

The panel, which has sought a three-month extension of its term to examine remaining issues, has recommended a special Composition Scheme in the brick kiln sector with effect from April 1, 2022, prescribing a GST rate of 6 per cent, without ITC (input tax credit), similar to the rate in the services sector.

It has also suggested hiking GST rate on supply of bricks from 5 per cent to 12 per cent (with ITC), with effect from April 1.

The council will review and also clarify regarding GST rates 32 goods and 29 services.

The items under review are Zolgensma and Viltepso medicines for personal use, solar PV modules, copper concentrate, carbonated beverage with fruit juice, coconut oil, scented sweet supari, oncology medicine, and diesel-electric locomotives.

Meanwhile, Kerala on Thursday said it will vehemently oppose any move to bring petrol and diesel under the GST regime as that will further reduce revenue generation for the state and asserted that the Centre should reduce its levies on the two commodities to provide relief to the common people.

Central excise and state VAT (Value Added Tax) make up for almost half of the retail selling price of petrol and diesel. Bringing them under the Goods and Services Tax (GST) would impact revenue generation for the states.

Kerala Finance Minister K N Balagopal said the state will strongly oppose, if there is any move to bring petrol and diesel under the GST regime, PTI reported. He said the the fuel prices skyrocketed due to the huge increase of its cess by the Centre and if the Union Government reduces the cess, that will help in bringing down the prices of petrol and diesel. According to him, if petrol and diesel are brought under the GST regime, the state will lose Rs 8,000 crore annually.

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In June, the Kerala High Court, based on a writ petition, had asked the GST Council to decide on bringing petrol and diesel within the goods and services tax (GST) ambit.

Five commodities – crude oil, natural gas, petrol, diesel, and aviation turbine fuel (ATF) – were kept out of the GST purview when it was introduced on July 1, 2017 considering the revenue dependence of the central and state governments on them.

Recently, the spike in global oil prices on demand recovery pushed petrol and diesel prices to an all-time high, leading to demand for bringing it under the GST.

(With PTI inputs)

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