Nirmala Sitharaman finance minister has been chaired the 45th GST Council meeting at Lucknow city. The council members have discussed several issues such as states compensation and revision of GST rates on Covid essentials, petrol diesel GST applicability or not, and food delivery app applicability.
The major discussion points for the council meeting are the petrol, diesel fuel inclusion under GST, and also cess-related provisions concerned with the states. Also, there is a major concern is about the food delivery apps Swiggy Zomato, which are been under the scanner of the government, as previously it has been suggested to take them under the restaurant category. We have updated every situation timely from officials’ resources. Here, taxpayers can download all recommendations of the 45th GST council meeting in PDF format. check here
All Update on 45th GST Council Meeting
- Zomato and Swiggy food delivery apps are now required to pay GST starting from 1st January 2022 as per the final decision and suggestion from the fitment committee. The time has been given to make changes in the software.
- The GST rate on paper sacks is now applicability 18%. The fortified rice kernel is reduced to 18% to 5& GST for ICDS and similar schemes.
- The oncology medicine is reduced from 12% to 5%.
- The GST rate on waste parings, the scrap of polyurethane, and other plastic have been increased to 18%.
- 18% GST is applicable on all sorts of pens.
- The henna powder and leaves have been reduced to a 5% GST rate and 12% on renewable equipment.
- All the Carbonated Fruit Beverages of Fruit Drink and Carbonated Beverages now attract 28% GST with an additional 12%.
- Almost all the states refused to discuss the inclusion of petrol diesel fuel in the GST ambit. However, the bio-diesel has been reduced to 5% from 12%.
- Iron, manganese, copper, nickel, cobalt, aluminium, lead, zinc, tin, chromium – ores and concentrates, all these items now attract 18% GST as decided by GST Council.
- GST Council also expressed to make different GST rates applicable on coconut oil, i.e. 18 per cent on hair oil packing in less than 1 litre can and 5 per cent on more than 1-litre packing of oil in can.
- FM Smt. @nsitharaman is now getting to brief the media about the decisions taken in the 45th GST Council meeting at around 6:30 PM (tentative) in Lucknow today.
- GoM’s recos on composition scheme, capacity-based GST for levying some products have been approved:
- Council consents to initiate a special distribution scheme for the brick kiln sector from April 2022.
- Council appoints GST rate of 6% externally ITC, related to services sector for the brick kiln.
- Council allows raising GST on the accumulation of bricks to 12% from 5% with ITC from April 2022.
- To bring in GST debt payment under reversed charge device on the mechanism on mentha at 1st stage of stocks.
- Councils allow blocking IGST refund route on
- Swiggy and Zomato are under review to become restaurants in which it may require to maintain 2 separate books of accounts (sales done through apps and other sales) by the individual shops. Also, another option is to deem them restaurant service providers taking GST from consumers, while the restaurant billing GST to apps.
- CNBCTV18 Exclusive | Special treatment medicines under covid get concession till 31 December:
- GST council expands permits to defined drugs used in COVID treatment till Dec 31
- There will be no GST on Amphotericin and Tocilizumab, however, there will be 5% GST on Remdesivir and on Heparin as well.
- Councils recommend uniting besides medicines under concessional charges.
- Council decreased the GST rate to 5% from 12% for Itolizumab, Posaconazole, Infliximab.
- The council degraded the GST rate to 5% from 12 % for Bamlanivimab and Etesevinab and Favipiravir.
- The council demoted the GST standard to 5% from 12% for Casirivimab & Imdevimab, Deoxy -D – Glucose.
- Councils approve Aadhaar authentication is being made compulsory to claim the compensation.
- Aadhar authentication is being offered to remove the cancellation of the booking.
- Aadhar authentication of enduring taxpayers to be done in a phased manner.
- Covid treatment drugs are under review for concession by the GST council. The council has earlier agreed to do so.
- Intrastate pharma supply in Sikkim has been out of GST ambit as the council rejects the 1 per cent covid cess on them.
- Covid treatment drugs which were earlier concession granted till September 2021 has now been extended till December 31. It includes 4 more medicines and various items.
- The finance minister Nirmala Sivaraman and the state finance minister will meet for the first time in person after 2 years to initiate the GST council meeting at Lucknow.
Download PDF of Recommendations by 45th GST Council Meeting
All Expectations on 45th GST Council Meet
During this meeting with the respective state ministers, many of whom specifically from the opposition ruled states, are making a demand for an assured compensation mechanism that is to continue for another 5 years. Further, in this meeting, the Union Ministry of Finance shall disclose various proper scenarios after June 2022 as disclosed by the senior official of the finance ministry.
GST council authority will discuss Aadhaar-based authentication for 8 million companies and firms. The members will make a plan and system for this process. “It is proposed that first Aadhaar-based authentication should be made mandatory for two sets of existing GST-registered entities – those who are seeking refunds, and those who apply for revocation of their cancelled registrations, a person said.”
However, recently, the Union revenue secretary Tarun Bajaj gave the indications that the greater dependence on borrowing or cess to fill the gap of the shortfall may not be the right approach. Though it is the GST council that has to take the final decision regarding compensating revenues for states, Bajaj said that box thinking is required to boost the revenues.
The gigantic amount of Rs 1.1. Lakh crore was borrowed during the Financial Year 2021 and an estimated 1.6 lakh core is required for compensating the states for the shortfall in the GST revenues. The loans have to be paid through cess proceeds. And worth mentioning that the cesses on the demerit goods are used for compensating the shortage in revenue. Any further increase in the assured compensation mechanism may lead to fresh borrowings that shall create additional liabilities requiring levying of cess for a much longer period.
Here the core issue is the structural weakness in the mechanism of the GST. Auto fuels and assorted other items had been kept out of the GST regime. Additionally, A series of rate cuts done by the GST council and the failure to plug revenue leakages has widened the gap for hiking consumption. It is important to mention that the weighted average GST rate at present is expected to be nearly 11.5%.
Read Also: GST Council 1st Meeting to 44th Meeting: All You Need to Know
Previously, the fitment panel of the GST council had recommended the continuance of the process of correcting inverted rate structures that had denied the government revenue. However, The proposal to rectify the inversions with regard to the GST rates on the readymade garments, footwear, and fabrics and their respective inputs such as yarns and fibres would likely be taken up.
Furthermore, the Punjab finance minister Shree Manpreet Singh Badal had recently made a suggestion to harmonize exemptions and tax rates so that the opportunities of evasions are removed and the tax credit chain can be simplified.
The gross receipts of GST touched the figure of Rs 92,849 crores in June 2021 after consecutive collection of Rs 1 lakh crores for the past eight months till May 2021and that was a decent sum considering the mega lockdown that ruined and devastated the lives of almost the entire population. Moreover, close vigilance of the Finance Ministry like catching fake billing, deep data analytics, effective tax administration, and so on have also been contributing factors in increasing the tax revenue.
Though the cess collection by the government was enough to meet the GST compensation requirement, Covid 19 pandemic has put a dent in the revenue collection in the financial year 2021 and it is expected in Financial Year 2022 also. The Finance Minister of West Bengal Amit Mitra has recently written a letter to the Union Finance Minister Nirmala Sitharaman and commented that GST shortfall compensation of states is nearly Rs 74,398 crores for the Financial Year 2021.
