GST Council: GST rate cut on essential drugs, food delivery firms to face tax burden

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admin November 8, 2021
Updated 2021/11/08 at 8:01 AM

The 45th meeting of the Goods and Service Tax (GST) Council is being hosted by Finance Minister Nirmala Sitharaman in Lucknow today. The GST Council will convene in person for the first time in almost two years. The GST rate reduction for Covid essential products have been extended until December 31 by the GST Council. However, the most recent expansion solely applies to medications.

Following a decision made at the GST Council meeting on September 17, online meal delivery companies Swiggy and Zomato will now be required to pay the government good and services tax.

“Yes, there was much debate… the point at which food is delivered will be the point at which tax is collected. They would cover the GST “Minister of Finance Nirmala Sitharaman briefed the media on the situation. She went on to say, “There is no new tax.”

Instead of restaurants collecting and depositing GST, the government has been working on a plan to require meal delivery apps to collect and deposit GST with the government.

At the moment, online invoices produced by food aggregators include a tax component. According to individuals familiar with these companies’ procedures, the taxable money is given back to the restaurant partners, who are then required to pay the government.

The GST rate reduction for Covid essential products has been extended until December 31 by the GST Council. Finance Minister Nirmala Sitharaman stated on September 17 that the new extension only covers medications and no other medical equipment.

“These pricing reductions were previously only valid through September 30. This has been extended in order to meet the ongoing demand for these medications “Sitharaman made the remarks while speaking to the media after the 45th GST Council Meeting in Lucknow. She also said that the tax rate for cancer medications has been reduced from 12 percent to 5%.

This was the first time the all-powerful federal assembly met in person in almost two years. The GST Council met in person for the final time in December 2019 in New Delhi. Five additional meetings have been held by video conference since then.

The GST Council reduced the GST rates on a variety of products critical in the battle against the Covid-19 epidemic during its June 12 meeting. Essential medications, oxygen, oxygen production equipment, and associated devices, as well as diagnostic and testing machine kits, are among them.

Remdesivir, Tocilizumab, medical grade oxygen, oxygen generators, ventilators, masks, covid testing kits, oximeters, hand sanitizers, cremation furnaces, ambulances, temperature monitoring devices, and other goods were all subject to a rate reduction.

Structure with Inverted Duties

From January 1, 2022, Sitharaman stated that the inverted duty structure on footwear and textiles would be rectified. To rectify an inverted duty structure, the GST rate on locomotives and some railway components has been raised to 18 percent from 12 percent. On the same point, a 12% GST would be levied on some renewable energy equipment.

On the recommendation of the Supreme Court, the Council took up the issue of an inverted duty structure. According to a recent ruling by the Supreme Court, refunds of unutilized input tax credits would not be granted in the event of a refund owing to an inverted duty structure. In its judgement, the Court acknowledged that the methodology for calculating the amount of eligible return had an irregularity and asked the GST Council to review and make a policy decision on the matter.

The Council discussed how to deal with profiteering issues and determine if the National Anti-Profiteering Body’s term would end on November 30 and its mandate should instead be handed to the Competition Commission of India (CCI) or another authority.

Other choices

For obtaining a licence for goods transport to operate throughout India, states levy a national permit fee. The GST on this national permit cost has been waived. Trainees participating in skill development programmes will not be required to pay GST.

The government has also extended the GST exemption for export products transported by ship and air for another year, till September 2022. Due to the difficulty that exporters experience in obtaining tax exemptions, the exemption was granted.

GST on petrol and diesel

Despite the considerable discussion, petrol and diesel were not placed within the GST umbrella at the most recent meeting. States have mostly opposed the proposal, claiming that now is not the appropriate moment to execute it.

“The topic of gasoline and diesel was brought up. Several states have said that they do not wish to be subject to the GST. The Council was instructed to inform the Kerala High Court that the issue had been considered. The Council decided that bringing petrol and diesel under GST was not the right moment “According to Sitharaman.

This comes at a time when gasoline and diesel prices have been steadily rising since May, hitting new highs throughout the nation. Taxes at the federal and state levels account for approximately 55 percent of the retail price of petrol and 51 percent of the retail price of diesel.

 

Source: MoneyControl

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