Highlights of 45th GST Council Meeting

The Goods and Service Tax (GST) council held its 45th GST council meeting on 17th September 2021, at Lucknow, Uttar Pradesh. The meeting was held under the Chairmanship of Finance Minister Nirmala Sitharaman. The GST Council meeting was held physically for the first time after one and a half years of virtual meetings. Reducing taxes on life-saving medicines, bringing petrol and diesel within the ambit of indirect tax, rationalizing an inverted duty structure, and treating food delivery apps as restaurant services were some of the Key Highlights of the 45th GST Council Meeting.

Key Highlights of 45th GST Council Meeting

The key decisions taken at the 45th GST Council Meeting is given here:

GST Council extends concessional GST rates on drugs used in COVID treatment till December 31st, 2021
GST Council cuts tax rates on medicines used in cancer treatment from 12 % to 5 %
GST Council cuts tax rates on biodiesel for blending with diesel cut from 12 % to 5 %
GST Council agrees to correct inverted duty structure on footwear and textiles from January 1^st, 2022
45th GST Council Meeting announced that a group of state ministers (GoM) will look at rate rationalization related issues, make recommendations in 2 months
E-commerce operators need to pay GST on restaurant service supplied through them; tax to be charged at the point of delivery
The 45th GST Council Meeting took no final decision on the proposal to bring petrol under GST.

COVID-19 relief measure in Form of GST Rate Concessions

45th GST council extended the GST relief on four drugs related to Covid-19 treatment till December 31^st, as well as announcing tax cuts for more life-saving drugs.
GST Council Meeting announced the tax concessions on life-saving drugs. Furthermore, there will be no GST on Amphotericin B, Tocilizumab till December 31 this year.

Extension of Existing Concessional GST rates on Key COVID-19 Medicines

Concessional GST rates on Covid-related drugs, which were till September 30, have now been extended till December 31 only for medicines, but not for medical equipment. The details of recommendations 44th GST Council Meeting are given below:

Sl. No.	Medicines	GST Rate recommended by GST Council
1.	Tocilizumab	Nil
2.	Amphotericin B	Nil
3.	Anti-Coagulants like Heparin	5%
4.	Remdesivir	5%
5.	Any other drug recommended by the Ministry of Health and Family Welfare (MoHFW) and Dept. of Pharma (DoP) for Covid treatment	5%

Reduction of GST rate to 5% on more Covid-19 Treatment Drugs

The proposal of reducing GST from 12% to 5% on seven more drugs till December 31, 2021, was also approved.

Sl. No.	Medicines	Present GST Rate	GST Rate Recommended by GST Council
1.	Itolizumab	12%	5%
2.	Posaconazole	12%	5%
3.	Infliximab	12%	5%
4.	Favipiravir	12%	5%
5.	Casirivimab & Imdevimab	12%	5%
6	2-Deoxy-D-Glucose	12%	5%
7	Bamlanivimab & Etesevimab	12%	5%

Inverted duty scheme on footwear and textiles

GST council announced that the inverted duty scheme on the footwear and textile sector will be corrected from January 2022.

GST on Petrol and Diesel

The 45th GST Council Meeting took no final decision on the proposal to bring petrol under GST. The council announced that the issue of whether specified petroleum products should be brought within the ambit of GST was placed for consideration before the Council. After due deliberation, the Council was of the view that it is not appropriate to do so at this stage.

Food Delivery Platforms come under GST

E-Commerce Operators are being made liable to pay tax on the following services provided through them:

Transport of passengers, by any type of motor vehicles through it with effect from 1st January 2022
Restaurant services provided through it with some exceptions with effect from 1st January 2022]

Regarding E-Commerce Operators and gig offices, it has been decided that since the place where food is delivered will be the point where tax is collected, the E-Commerce operator who will be collecting tax will pay up the GST. The GST council now announced that there is no new tax. Previously the tax was paid by restaurants but now aggregators like Zomato and Swiggy will pay the tax.

GST Rate changes for Goods

45th GST Council Meeting announced the following recommendations on GST rate changes about Goods with effect from 1.10.2021:

The GST rate on retro fitment kits used by disabled persons is now reduced to 5%.
The GST rate on fortified rice kernels used for ICDS is reduced from 18% to 5%.
GST rate on bio-diesel supplied to oil marketing companies reduced from 12% to 5%
Cancer-related drugs (Keytruda being one of them) are now at a reduced rate of 5% from 12%.

GST Rate Changes on Other Goods

Description	Present GST Rate	GST Rate recommended by GST Council
Ores and concentrates of metals such as iron, copper, aluminum, zinc, and few others	5%	18%
Specified Renewable Energy Devices and parts	5%	12%
Cartons, boxes, bags, packing containers of paper, etc.	12%/18%	18%
Waste and scrap of polyurethanes and other plastics	5%	18%
All kinds of pens	12%/18%	18%
Railway parts, locomotives & other goods in Chapter 86	12%	18%
Miscellaneous goods of paper like cards, catalogs, printed material (Chapter 49 of tariff)	12%	18%
IGST on import of medicines for personal use, namely Zolgensma for Spinal Muscular Atrophy Viltepso for Duchenne Muscular Dystrophy Other medicines used in the treatment of muscular atrophy are recommended by the Ministry of Health and Family Welfare and the Department of Pharmaceuticals.	12%	Nil
IGST exemption on goods supplied at Indo-Bangladesh Border	Applicable rate	Nil
Unintended waste generated during the production of the fish meal except for Fish Oil	Nil (for the period 1.7.2017 to 30.9.2019)

Clarifications concerning the GST rate on goods

The clarification issued by 45th GST Council Meeting concerning the GST rate on goods are as follows:

Sl. No.	Item	GST Rate
1.	Pure henna powder and paste (that have no additives)	5%
2.	Brewers’ Spent Grain (BSG), Dried Distillers’ Grains with Soluble [DDGS], and other such residues, falling under HS code 2303	5%
3.	Laboratory reagents and other goods falling under heading 3822	12%
4.	Scented sweet supari and flavored and coated elaichi falling under heading 2106	18%
5.	Carbonated fruit beverages of fruit drinks and carbonated beverages with fruit juice	28% and cess of 12%
6	Tamarind seeds fall under heading 1209	Nil for seeds used for sowing, otherwise 5%
7	External batteries sold along with UPS systems/inverter	28%, other than lithium-ion batteries
8	UPS/inverter	18%
9	Paper and paperboard containers, whether corrugated or non-corrugated	18%
10	Fresh/dried nuts	5%/12%
11	Pharmaceutical goods falling under heading 3006	12%

Clarifications concerning the GST rate on services

45th GST Council Meeting announces the following clarifications concerning the GST rate on services

Sl. No.	Service	GST Rate
1.	Coaching services to students provided by coaching institutions and NGOs under the central sector scheme of ‘Scholarships for students with Disabilities”	Exempt
2.	Services by cloud kitchens/central kitchens are now covered under ‘restaurant service	5%
3.	Ice cream by parlors	18%
4.	Overloading charges at toll plazas	Exempt
5.	Renting of vehicles by state transport undertakings and local authorities is now covered by the expression ‘giving on hire’	Exempt
6	Grant of mineral exploration and mining rights	18%
7	Admission to amusement parks with rides, etc.	18%
8	Admission to facilities that have casinos	28%
9	Alcoholic liquor for human consumption is not food and food products for the entry prescribing the 5% GST rate on job work services about food and food products.	NA

Recommendations Relating to GST Law and Procedure

A previous 44th GST Council decision stated that interest is to be charged only in respect of the net cash liability under GST. Section 50 (3) of the CGST Act to be amended retrospectively, from 1st July 2017, to provide that interest is to be paid by a taxpayer on “ineligible ITC availed and utilized” and not on “ineligible ITC availed”. It has also been decided that interest in such cases should be charged on the ineligible ITC availed and utilized at 18% from 1st July 2017.
The unutilized balance in the CGST and IGST cash ledgers may be transferred between distinct persons (i.e., entities with the same PAN but registered in different states) without a refund procedure.

Relaxation in the requirement of filing FORM GST ITC-04

Requirement of filing FORM GST ITC-04 under rule 45 (3) of the CGST Rules has been relaxed by 45th GST Council Meet:

Taxpayers whose annual aggregate turnover in the preceding financial year is above Rs. 5 crores shall furnish ITC-04 once in six months
Taxpayers whose annual aggregate turnover in the preceding financial year is up to Rs. 5 crores shall furnish ITC-04 annually

Measures for streamlining compliances in GST

Aadhaar authentication of registration to be made mandatory for being eligible for filing refund claim and application for revocation of cancellation of registration
Late fee for delayed filing of FORM GSTR-1 to be auto-populated and collected in next open return in FORM GSTR-3B.
Refund to be disbursed in the bank account, which is linked with the same PAN on which registration has been obtained under GST.
Rule 59(6) of the CGST Rules to be amended with effect from 01.01.2022 to provide that a registered person shall not be allowed to furnish FORM GSTR-1 if he has not furnished the return in FORM GSTR-3B for the preceding month.
Rule 36(4) of CGST Rules, 2017 to be amended, once the proposed clause (aa) of section 16(2) of CGST Act, 2017 is notified, to restrict availment of ITC in respect of invoices/ debit notes, to the extent the details of such invoices/ debit notes are furnished by the supplier in FORM GSTR-1/ IFF and are communicated to the registered person in FORM GSTR-2B.

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