Finance Minister Nirmala Sitharaman announced a slew of incentives to few sectors in the form of GST rate cuts and in some cases exemptions from taxes.
Sitharaman chaired the 45th meeting of the Goods and Service Tax Council Council in Lucknow today. The meeting was the first in-person meeting between the Union Finance Minister and State Finance Ministers in two years.
Sitharaman said, the Council has taken people-friendly and long-pending decisions taken today.
Among the first announcements was regarding exemption of GST on drugs. Sitharaman said, two drugs: Zolgensma and Viltepco--which are probably costing Rs 16 crore will be exempted from IGST.
The FM said that the exemption process earlier was tiring for patients.
Sitharaman said, the Ministry of Health has exempted IGST for drugs used for muscular atrophy for personal use.
The concessional GST rates on corona-related medicines extended till December 31, 2021 from September 30, 2010. The Council had earlier exempted immunosuppressant Tocilizumab and mucomycosis (black fungus) drug Amphotericin B from GST.
GST rates on seven other medicines recommended by pharmaceutical reduced to 5 percent till 31 December .
Cancer drugs like Keytruda and other medicines for use in cancer have been reduced to 5 percent from 12 percent.
GST on retro-fitment kits for vehicles used by Divyang/Persons with Disabilities reduced to 5 per cent, says finance minister Nirmala Sitharaman.
GST rate on fortified rice kernels which can be used in schemes like Integrated Child Development Services Scheme has been reduced from 18 per cent to 5 per cent, the finance minister said.
GST rate on bio diesel supplied to OMCs for blending with diesel reduced to 5 percent from 12 percent.
Services category
Exemption given to transport of exports goods by vessel and air exempted given due to difficulties faced to get ITC refunds by exporters. Although the portal is quite stabilised, due to post-pandemic situation extended to one more year.
State permit fees for granting goods carriages to operate throughout India or contiguous states is exempted from GST.
Training programmes funded wholly by Central govt or state govt is fully exempted.
IGST on imports of aircrafts on lease are exempted from double taxation. It will facilitate domestic industry and aviation sector. These will allow for import of good without IGST. This exemption will be allowed for those lessors located in SEZs who pays GST under forward charges.
Inverted Duty Structure Correction
The Council decided that GST rate changes to have inverted duty structure correction in footwear and textiles sector, as discussed in GST Council and was deferred (corrections done only on mobile phones). GST Council has agreed to implement from January 1, 2022.
Ores, specified metals: rates on services on royalty that constitues a substantial portion, but not decided on dates yet.
GST rate on pen parts is 18 percent while certain pens is 12 percent. It is being corrected and uniform 18 percent. THis is done so that easy to seek refunds.
Energy devices attract 5 percent GST--metals, plastics, chemicals, etc attract 18 percent. Hence an inverted rate structure to claim refunds ITC. To reduce inversion, therefore, it is recommeneded to presribe GST at 12 percent on those specified renewable devices. It will help domestic manufacturing and Atma Nirbhar Bharat.
Railway parts, locomotives and other parts of railways that fall under Chapter 86. It will be increased from 12 percent to 18 percent to correct the inversion.
Clarificatory notes
Speculation on fuel under GST: This item came on agenda on today's agenda purely due to High Court of Kerala order, said the Finance Minister.
The court had suggested the matter be placed before GST Council. Members said they would not want it to be included in GST.
It was also clearly asked how we will report to the Court on this matter: It was decided by the Council that we will go back to the Court.
GST Council decided to form two Group of Ministers (GoMs)
The Finance Minister said: "Two GoMs formed today. One will look at rate rationalisation related issues and will submit a report in two months time."
"The second GoM will look into related issues of E-way bills, Fastags, Technology, compliance, and compensation schemes. This GoM will also submit report in two months," the Finance Minister said.
Swiggy, Zomato come under GST
There were detailed discussions on gig workers like Swiggy, Zomato today. The place where the food is delivered will be the point where tax is collected by the Swiggy and Zomato like services, the finance minister said.
Earlier, tax was paid by restaurants but now aggregators such as Zomato and Swiggy will pay the tax, the GST Council has decided. This move would help protect revenue, said Sitharaman.
Cess will be collected till March 2026, said the Finance Minister.
