45th GST Council Meet Key Changes In GST Rate

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What has happened?

Rate cuts for a number of cancer and Covid-related medicines and a shift in tax payment liability to restaurant delivery aggregators such as Swiggy, Zomato instead of restaurants,
Were two of the key decisions taken by the Goods and Services Tax (GST) Council in its 45th meeting in Lucknow on Friday.
The Council, which held an in-person meeting after 20 months.

Important decisions

Existing concessional rates, which were valid till September 30, have been extended till December 31 for Covid-19 medicines: Remdesivir (5 per cent), Tocilizumab (nil), Amphotericin B (nil), and anti-coagulants like Heparin (5 per cent). However, the concessional tax for medical equipment will end on September 30.
Reduction of GST rate to 5 per cent on more Covid-19 treatment drugs, up to December 31: Itolizumab, Posaconazole, Infliximab, Favipiravir, Casirivimab & Imdevimab, 2-Deoxy-D-Glucose, Bamlanivimab.
The Council also decided to remove GST on the import of muscular atrophy drugs like Zolgensma and Viltepso, which cost crores of rupees, Sitharaman said.
The GST rate for Keytruda, used for the treatment of cancer, has been cut to 5 per cent from 12 per cent.
The Council also cut GST rates on fortified rice kernels to 5 per cent from 18 per cent, and on bio-diesel for blending in diesel to 5 per cent from 12 per cent.
GST on ores and concentrates of metals such as iron, copper, aluminum, and zinc has been increased from 5 per cent to 18 per cent, and that on specified renewable energy devices and parts from 5 per cent to 12 per cent.
Cartons, boxes, bags, and packing containers of paper will now attract a uniform 18 per cent tax in place of the 12 per cent and 18 per cent rates.
Waste and scrap of polyurethanes and other plastics will also see tax going up to 18 per cent from 5 per cent currently.
All kinds of pens will be charged an 18 per cent rate, while miscellaneous goods of paper like cards, catalogues, and printed material will see GST increasing to 18 per cent from 12 per cent.
The rate for carbonated fruit beverages and carbonated beverages with fruit juice will attract a GST rate of 28 per cent, plus compensation cess of 12 per cent.
IGST of 12 per cent on import of medicines Zolgensma for spinal muscular atrophy and Viltepso for Duchenne muscular dystrophy, has been waived. These drugs cost up to Rs 16 crore.

Food delivery apps

From January 1, food delivery apps will have to collect and deposit 5% GSTwith the government,
In place of restaurants, for deliveries made by the platforms.
Currently, if a customer orders food, for example, from Restaurant A using Swiggy or Zomato, the food delivery platform collects the 5% tax on food from the customer and passes it on to the restaurant.
However, the government believes that several restaurants have not deposited their tax despite them recording high turnover.
So, effective January 1, the food-delivery apps will collect the tax on behalf of the restaurant and will also deposit it on their behalf.
As a result of this, the restaurants will also have to mandatorily register themselves as is done by e-commerce sellers.
Tax experts suggest that the most significant impact will be on smaller restaurants, particularly those with annual turnover of less than Rs 20 lakh, as they were not included in the GST net before.
For most restaurants now, however, there will be an added compliance burden in that they will have to keep two separate books of accounts —
One for their normal business and second for the business done through Zomato or Swiggy.

Compensation cess

The Council also decided to put an end date of June 2022 to the compensation mechanism, as mandated in law.
The levy of compensation cess will continue from July 2022 onwards till March 2026 to service the borrowing, which had been resorted to in order to bridge the compensation gap in the years 2020-21 and 2021-22.
The debt for making compensation payments to states is estimated to be around Rs 2.7 lakh crore, a senior Finance Ministry official said.
States were guaranteed compensation under GST for the revenue gap between actual collections and the protected amount based on 14% compounded rate from base year 2015-16 for five years after the GST rollout, until June 2022.
Last year, the government had decided to borrow to meet the compensation cess deficit through back-to-back loans to states.

Other decision

The Council has decided to set up a GoM to examine the issue of correction of inverted duty structure for major sectors; rationalise the rates and review exemptions from the point of view of revenue augmentation.
To correct the inverted duty structure, GST rate changes will be made for the footwear and textiles sector, but the decision has been deferred for implementation till January 1 next year.

Q) Goods and Service tax is based on which of the following?