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 themes on the agenda. ​​

Finance Minister Nirmala Sitharaman on Friday chaired the 45th meeting of the Goods and Service Tax (GST) Council in Lucknow. This was the Council's first in-person meeting in almost two years since the onset of the Covid-19 pandemic.

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 themes on the agenda. Here's what you need to know:

Tax concessions on Medicine

FM Sitharaman started the conference with announcing the GST Council's decision to give tax concessions on life-saving drugs. Furthermore, there will be no GST on Amphotericin B, Tocilizumab till December 31 this year.

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 proposal of reducing GST from 12% to 5% on seven more drugs till December 31, 2021 was also approved: Itolizumab, Posaconazole, Infliximab, Bamlanivimab and Etesevimab, Casirivimab and Imdevimab, 2-Deoxy-D-Glucose and Favipiravir.

"There are some life-saving drugs not connected with Covid-19, but are very expensive, for which exemptions are being given," the FM said. "Zolgngelsma and Viltepso costing around Rs 16 crore will now be exempted from GST," she added.

GST on retro-fitment kits for vehicles used by persons with disabilities was reduced to 5% and drugs suggested by the Health Ministry for treating muscular atrophy were exempted from IGST.

Petrol and Diesel
The GST Council took no final decision on the proposal to bring petrol under GST. Sitharaman categorically said this was not right time to do so and mentioned the matter was brought before the Council due to the Kerala HC order.

The GST Council will go back to the Court with its rationale.

States vehemently opposed the inclusion of the fuels while raising concerns on revenue buoyancy during the meet, as per govt sources. "We are not saying that we should bring petrol and diesel under GST immediately, we are basically asking states to suggest a timeline," a govt source had told TOI before the crucial meet.

When GST was introduced in July 2017, five commodities including crude oil, natural gas, petrol, diesel and aviation turbine fuel (ATF) were kept out of the GST purview, considering the revenue dependence of the central and state governments on them.

Food Delivery Platforms
"There is no new tax," the FM said on reports about GST on food order from 

 and Swiggy. "E-commerce operators Swiggy and Zomato to pay GST on restaurant service supplied through them, and tax to be charged at point of delivery," she added.

"Regarding Swiggy-like 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 Swiggy-like operator who will be collecting tax will pay up the GST on it," Sitharaman said.

Such food delivery apps will now be required to collect 5% GST from consumers instead of the restaurant they pick up orders from, Sitharaman said after the Council meeting.

Now aggregators such as Zomato and Swiggy will bear the tax burden that was earlier paid by restaurants. The end-users will still not have to pay anything extra.

The two apps are now registered as tax collectors at source under GST.

Other highlights
The FM announced that two groups of ministers will be constituted to look into certain changes in the GST regime. One group would look at rate rationalisation issues and submit a report in two months, while the second group will look into related issues of e-way bills, fastags, technology, compliance, composition schemes.

It was also told that GST compensation cess will need to be extended till March 2026.

The GST Council exempted national permit fee charged by states for operation of goods carriage. A reduction in GST rate on biodiesel -- supplied to OMCs for blending with diesel -- from 12% to 5% was also announced.

The Council approved increasing GST on railway part and locomotives to 18% from the current 12%.

An inverted duty scheme on footwear and textiles will be corrected from January 1, 2022, said Sitharaman. Now 12% GST will be applicable on specific renewable devices and pens will now attract single GST rate of 18%.

GST rate on fortified rice kernels which can be used in Integrated Child Development Services Scheme has been reduced from 18% to 5%.