The 45th GST Council meeting, which will be led by Finance Minister Nirmala Sitharaman and held in Lucknow today, is expected to address bringing fuel and diesel under indirect taxation and deciding on a GST rate decrease for COVID-19 essential drugs. This is the first on-ground GST Council meeting in over two years, as the last one was place in 2019, before COVID-related limitations were implemented in the country.
Inclusion of petrol, diesel under the ambit of GST
The GST Council is expected to examine the notion of including petrol and diesel in the GST’s ambit today. Fuel prices have reached record highs this year, prompting the Kerala High Court to give a directive on a writ suit brought by the Kerala Pradesh Gandhi Darshanavedhi that petrol and diesel be included in GST. According to the Kerala High Court’s ruling, petrol, diesel under GST should be examined by the GST Council.
According to insiders, the GST Council is set to propose imposing a tax on petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aircraft turbine fuel (ATF).
However, Kerala Finance Minister K N Balagopal and Maharashtra Deputy Chief Minister Ajit Pawar have stated that they are opposed to the inclusion of petrol and diesel in the GST.
Extension of GST Rate Reduction on COVID-19 essential medicines
The 45th GST Council is expected to discuss extending the GST rate decrease on four essential COVID-19 drugs – Tocilizumab, Amphotericin B, Remdesivir, and anti-coagulants such Heparin – from 12% to 5% until December 31, 2021. These drugs are presently eligible for a pricing decrease that will last until September 30, 2021.
The GST Council reduced tax rates on medical grade oxygen, oxygen concentrators/generators, ventilators, ventilator masks /canula /helmet, and other related medical devices from 12% to 5% earlier this year, based on recommendations from a group of ministers convened at the 44th GST Council meeting to deliberate on the tax rates of COVID-related essential items.
GST compensation shortfall to states after June 2022 period
Since April 2020, states have received a total of Rs. 1,13,000 crore in GST compensation. According to sources, the money in the GST compensation pool is insufficient to cover the whole compensation need due to COVID’s impact on GST and GST Cess collection. The GST Council may meet today to discuss ideas for making up for the GST compensation shortage.
Inclusion of food serving delivery services under GST
The GST Council is expected to debate a proposal to classify food serving, preparation, and delivery services (including takeout and door delivery) as “restaurant service.” According to reports, these services may be subject to a 5% GST.
If the proposal is approved by the GST Council, prominent food delivery apps like Zomato and Swiggy, among others, will be subject to the 5% GST rate.