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All Updates of 45th GST Council Meeting Held On 17-09-2021 with New GST Rates

Written by Harleen Kaur Dt. September 29th, 2021

Finance Minister Nirmala Sitharaman on Friday Conduct the 45th meeting of the Goods and Service Tax (GST) Council in Lucknow. This was the Council’s first in-person meeting in almost two years since the start of the Covid-19 pandemic.

Reducing taxes on life-saving medicines, bringing petrol and diesel within the ambit of indirect taxation, rationalizing an inverted duty structure, and treating food delivery apps as restaurant services were a number of key points on the agenda.

FM Sitharaman started the conference with announcing the GST Council’s decision to grant tax concessions on life-saving drugs. Furthermore, there’ll be no GST on Amphotericin B, Tocilizumab till day this year.

The points discussed in meetings are :-

  • Concessional GST rates on Covid-related drugs, which were till September 30, have now been extended till December 31 just for medicines, but not for medical equipment.
  • The suggestion of reducing GST from 12% to five on seven more drugs till Day, 2021 was also approved: Itolizumab, Posaconazole, Infliximab, Bamlanivimab and Etesevimab, Casirivimab and Imdevimab, 2-Deoxy-D-Glucose and Favipiravir. “There are number of life-saving drugs which don’t seem to be connected with Covid-19, but are very expensive, that exemptions are also are being given,” the FM said. “Zolgngelsma and Viltepso costing around Rs 16 crore will now be exempted from GST.
  • Supply of mentha oil from unregistered person has been brought under reverse charge mechanism. Further, Council has also recommended that exports of Mentha oil should be allowed only against LUT and consequential refund of input tax credit.
  • Brick kilns would be brought under special composition scheme with threshold limit of Rs. 20 lakhs, with effect from 1.4.2022. Bricks would attract GST at the rate of 6% without ITC under the scheme. GST rate of 12% with ITC would otherwise apply to bricks.
  • There where a Correction in Inverted Duty structure in Footwear and Textiles sector GST rate changes so as 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, are implemented with effect from 01.01.2022.
  • Petrol and Diesel – There where no judgment by GST Council on the proposal to bring petrol under the GST ambit . Sitharaman categorically said this wasn’t right time to try to do so and mentioned the matter was brought before the Council because of Kerala HC order. The GST Council will return to the Court with its rationale. States vehemently opposed the inclusion of the fuels while raising concerns on revenue buoyancy during the meet, as per govt sources. “We don’t seem to saying to instantly bring the petrol and diesel under GST , we are basically just asking states to suggest a timeline,” a govt source had told TOI before the crucial meet. When GST came into force i.e. on July 2017, five commodities including crude oil, natural gas, petrol, diesel and aviation turbine fuel (ATF) were kept out of the GST purview, considering the revenue dependence of the central and state governments on them.
  • GST on retro-fitment kits for vehicles utilized by persons with disabilities was reduced to five and drugs suggested by the Health Ministry for treating muscular atrophy were exempted from IGST.
  • Food Delivery Platforms – “There is not any new tax,” the FM said on reports about GST on food order from Zomato NSE -2.47 % attempt to Swiggy. “E-commerce operators Swiggy and Zomato to pay GST on restaurant service supplied through them, and tax to be charged at point of delivery,” she added. “Regarding Swiggy-like operators and gig offices, it’s been decided that since the place where food is delivered are the purpose where tax is collected, the Swiggy-like operator who are collecting tax pays up the GST on that,” Sitharaman said. Such food delivery apps will now required to collect 5% GST from consumers rather than the restaurant they devour orders from, Sitharaman said after the Council meeting. Now aggregators like Zomato and Swiggy will bear the tax burden that was earlier paid by restaurants. The end-users will still not need to pay anything extra. The two apps are now required to get them registered under GST as tax collectors at source .

Other highlights:

The FM announced that two groups of ministers are going to be constituted to appear into certain changes within the GST regime. One group would take a look at rate rationalization issues and submit a report in two months, while the second group checks out related problem with e-way bills, fastags, technology, compliance, composition schemes.

It was also said that GST compensation cess till will have to be extended March, 2026.

The GST Council exempted national permit fee charged by states for operation of products carriage. A discount in GST rate on biodiesel -supplied to OMCs for blending with diesel-from 12% to five was also announced. The Council approved increasing the rates of GST on railway part and locomotives to 18% from this 12%.

An inverted duty scheme on footwear and textiles are going to be corrected from January 1, 2022, said Sitharaman. Now 12% GST are going to be applicable on specific renewable devices and pens will now attract single GST rate of 18%.

GST rate on fortified rice kernels which might be employed in Integrated Child Development Services Scheme has been reduced from 18% to five

Recommendations relating to GST law and procedure

Measures for Trade facilitation:

  • Relaxation with the requirement of filing FORM GST ITC-04: Requirement of filing FORM GST ITC-04 under rule 45 (3) of the CGST Rules has been relaxed as under:

    a. Taxpayers whose annual aggregate turnover in preceding financial year is above Rs. 5 crores shall furnish ITC-04 once in six months;

    b. Taxpayers whose annual aggregate turnover in preceding financial year is up to Rs. 5 crores shall furnish ITC-04 annually.

  • In the spirit of earlier Council decision that interest is to be charged only in respect of net cash liability, section 50 (3) of the CGST Act to be amended retrospectively, w.e.f. 01.07.2017, to provide that interest is to be paid by a taxpayer on “ineligible ITC availed and utilized” and not on “ineligible ITC availed”. It has also been decided that interest in such cases should be charged on ineligible ITC availed and utilized at 18% w.e.f. 01.07.2017.
  • Unutilized balance in CGST and IGST cash ledger may be allowed to be transferred between distinct persons (entities having same PAN but registered in different states), without going through the refund procedure, subject to certain safeguards.

Written by
Harleen Kaur
Articled Clerk

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