Key takeaways from the 43rd GST Council meet
The GST Council kept tariffs on COVID-19 vaccinations and medical supplies unchanged on Friday, but exempted a drug used to cure black fungus from charge.
A ministerial group would deliberate on the tax structure for vaccines and medical supplies, Finance Minister Nirmala Sitharaman told the press.
The GST Council’s first meeting of the year comes as the country struggles to recover from the second wave of Covid-19 illnesses that has stalled economic growth. Though the council is mandated to convene quarterly, the most recent meeting took place in October of last year.
Issues that dominated discussion at the meeting
1. The Council has resolved to extend the exemption for relief items until August 31, 2021.
2. Amphotericin B, a medication used to treat black fungus, has also been included exempted group.
3. Imports of Covid-related relief items will be free from IGST until August 31, 2021, regardless of whether they are purchased or intended for donation to the government or to any relief organization on the suggestion of a state authority.
4. FM Sitharaman introduced an Amnesty Program to waive late fees. Under this approach, small taxpayers may file pending returns.
5. A Group of Ministers will be constituted immediately and will give their report within ten days – on or before June 8 – so that any additional reductions that are necessary will be implemented, in the sense that rates will be determined by them.
Contentious issue of compensation cess
Nirmala Sitharaman stated that she has assured members that a special session will be held just to discuss compensation cess beyond July 2022. “Compensation figures of Rs 1.58 lakh crore have been calculated. We will make the funds available to states in the form of back-to-back loans “FM stated.
Inverted Tax Structure
The council held lengthy discussions on the inverted tax structure. Inverted duty is a term that refers to taxes on inputs that are higher than taxes on final products. Numerous states have stated that a course correction is necessary in this area, notably in industries such as fertilizers, steel kitchenware, solar panels, tractors, tyres, electrical transformers, pharmaceuticals, textiles, and cloth, as well as railway locomotives.
GST on medical essentials
The Finance Minister Nirmala Sitharaman recently stated that eliminating the 5% GST on vaccines will have a detrimental impact on costs because “manufacturers will be denied input tax credits, which they will pass on to consumers as a cost.”
Shreeda Shah is a Chartered Accountant associated with Legalwiz.in as a Business Advisor. She has a good expertise over Direct Taxation and Indirect Taxation compliances.