45th GST council meeting: Concessional GST rates on COVID-19 related medicines extended till Dec 31st


45th GST council meeting: Finance Minister Nirmala Sitharaman chaired the 45th Meeting of the Goods and Services Tax (GST) Council in Lucknow on September 17, 2021. While addressing the media on the outcomes of 45th GST Council meeting, FM Sitharaman said that the Council has taken quite a few people-friendly decisions. 

The 45th GST Council meeting was attended by finance ministers from all states and several senior officers and hosted by Chief Minister and Finance Minister of Uttar Pradesh. This is the first time that a GST Council meeting took place in Lucknow, capital of Uttar Pradesh. It is also the first physical meeting of the GST Council following the outbreak of COVID-19. 

45th GST council meeting: Key Decisions

•The Finance Minister announced that the GST Council has decided to exempt the following life-saving drugs that are not connected with COVID-19 but are very expensive from GST taxation:

-Zolgngelsma and Viltepso- These drugs cost around Rs 16 Cr. 
-Drugs to treat muscular atrophy have also been exempted from IGST for import on personal use

•The GST Council has also decided that the concessional GST rates on COVID-19 related medicines that were announced earlier till September 30, will now be extended till December 31, 2021.

•This extension has only been given for medicines that were given exemption earlier and not medical equipment. The medicines include:

-Amphotericin B (0%)
-Tocilizumab (0%)
-Remdesivir (5%)
-Heparin (5%)

•The GST rate on 7 other medicines recommended by Pharmaceutical Dept has been reduced from earlier 12 percent to 5 percent till December 31, 2021. 

•The GST rate on cancer-related drugs has also been reduced from earlier 12 percent to 5 percent.

•The GST rate on retro-fitment kits for vehicles used by Divyang/ Persons with Disabilities has also been reduced to 5 percent.

•The GST rate on fortified rice kernels that can be used in schemes like Integrated Child Development Services Scheme has been reduced from 18 percent to 5 percent. 

•The GST rate on biodiesel (supplied to oil marketing companies for blending with diesel), has also been reduced from 12 percent to 5 percent. 

What has been exempted from GST?

Transport of export goods by vessels and air is exempted from GST. This was announced due to the difficulties faced by exporters for getting Input Tax Credit refund due to technical issues on GST Portal. FM Sitharaman announced that though the GST Portal is stable now, keeping in view the COVID-19 pandemic, the exemption is being extended by one year, so that exporters do not suffer.

The National Permit Fee charged by states for granting permit to goods vehicles to operate throughout India or in contiguous states has also been exempted from GST.

Training programmes in which government bears 75% or more of the cost shall now be exempt from GST. 

IGST payable on import of aircraft or other goods imported on lease will now be exempted from double taxation to facilitate domestic industry & the aviation sector. This will allow the transfer of goods imported under lease without payment of IGST.

Petroleum products will not be brought under GST

The Finance Minister noted that there has been a lot of media speculation on whether petroleum products will be brought under ambit of GST and clarified that this topic came on today’s agenda purely because of the Kerala High Court order where it suggested the matter to be placed before GST Council.

Sitharaman shared that the GST Council members made it clear that they do not want petroleum products to be included under GST. She said that the council will report back to Kerala HC that the matter has been discussed & Council felt it was not the time to bring petroleum products under GST.

Other Key Decisions 

The GST Council decided that the GST rate changes will be done to correct Inverted duty structure anomalies in footwear & textile sectors and this will be implemented from Jan 1, 2022.
The inverted duty structure anomalies for ores and specified metals will also be corrected. 

The Council has also decided to correct Inverted duty structure anomalies in pens by making the rate on all pens and pen parts to 18%, as till now GST on pen parts was 18%, while it was 12 percent on certain kinds of pens. 

The GST for specified renewable devices will be 12 percent. This will help domestic industry and #Aatmanirbhar Bharat, particularly at a time when India is looking at emphasizing on generating renewable energy. The specified renewable energy devices attracted 5 percent GST till now but all their inputs were taxed at 18 percent. 

The GST on Railway parts and locomotives and other rail parts under Chapter 86 will be increased from 12 percent to 18 percent to correct inverted duty structure. 

44th GST Council Meeting Updates

•The 44TH GST Council Meeting had taken place on June 12, 2021 during which the council decided to reduce GST tax for several medical supplies and equipment in the wake of the second wave of the COVID-19 pandemic in India.

•The council had agreed to cut GST rates for ambulances from 28 percent to 12 percent, hand sanitisers from 18 percent to 5 percent and for temperature check equipment from earlier 18 percent to 5 percent.

•The GST rate for pulse oximeters was also reduced from 12 percent to 5 percent and COVID-19 testing kits, medical-grade oxygen and ventilator from 12 percent earlier to 5 percent. The GST Council had also agreed then to continue the tax rates of five percent for COVID vaccines.

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