The GST Council in its first ever physical meet since the outbreak of the pandemic in March 2020 held in Lucknow was chaired by the Finance Minister along with various finance ministers of states and union territories along with senior officers from the government and tax department.
The key issues on the agenda were around rationalizing an inverted duty structure. Know all important decisions here:
GST compensation cess to be extended
Finance Minister Niramala Sitharaman has said that GST compensation cess will need to be extended till March 2026. This is being done to make up for the revenue to repay loans that are taken to cover the cess shortfall by states in FY21 and FY22, Sitharaman said.
There is a belief that the government would also put up a proposal before states and suggested options on how the compensation can be extended beyond the prescribed that but the same call has to be taken by the states. Hence some considerable time shall be granted to states, to let them decide on the mode which suits them best.
Correction of anomalies in inverted duty scheme
Inverted duty scheme on footwear and textiles will be corrected from January 1, 2022, says FM Sitharaman.
UPS and external battery shall be treated at par:
Council proposes to increase GST on railway components, locomotives to 18% from the current 12%. In the current regime, GST on UPS is 18%, while that for external battery is at 28%.
GST relief for exported goods extended for yet another year
Goods that are transported by air and sea will continue to be exempt from GST for one more year. This is due to difficulties being faced by exporters for getting input tax credit refund, Sitharaman said. The national permit fee charged by states for goods vehicles operating throughout India is being exempted from GST.
Rate rationalisation and extension for the concession GST
GST exemption has been given on expensive imported drugs like Zologensma and Viltetso, says FM Sitharaman.
Concessional GST rates on covid related drugs, which were till Sept 30, has now been extended till December 31, says FM. The extension on concessional rates has been given only for medicines like Remdesivir but not for medical equipment. State charge national permit fee for granting permit to goods carriages. This fee is exempted from GST, she adds.
In the past, the GST council reduced rates for 30 items used in the treatment of Covid and mucormycosis (black fungus), including Amphotericin B (5 per cent to nil), Tocilizumab (5 per cent to nil), Remdesivir (12 per cent to 5 per cent), and anti-coagulants like Heparin (12 per cent to 5 per cent). Oxygen, oxygen generation equipment and related medical devices as well as testing kits saw GST rates slashed from 12 per cent to 5 per cent.
Auto fuel prices not within the scope of GST
The FM highlighted that the product was discussed in the agenda because of the High Court of Kerala order and as the Council deemed that it is not the right time to bring the item under GST net, the same inputs will be passed on to the High Court.
For long various sections, have been demanding inclusion of fuel products under GST such that state levies can be done away with and fuel gets cheaper which has crossed record levels of Rs. 100 per litre in most cities.