GST Council Meet Highlights: Covid-19 relief material, black fungus drug exempted from tax; return filing simplified

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Updated: May 28, 2021 11:12:04 pm

GST Council Meet Highlights: The GST Council met today after a gap of over seven months.

GSTSome state finance ministers in the GoM are understood to have pitched for a rate cut on COVID-19 essentials.

GST Council Meeting Highlights: The 43rd GST Council meet was held earlier today where the council decided to exempt certain covid-19 relief material from IGST till August end. The council also decided that certain drugs used to fight black fungus will also be given exemption. Finance Minister Nirmala Sitharaman said that a Group of Ministers (GoM) will be formed that will discuss and decide on the matter of taxation on covid-19 related materials. The GoM will submit a report by June 8. Further, the GST Council will meet ahead to discuss the extension of Compensation Cess that is due to end in 2022.

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Highlights

    21:47 (IST)28 May 2021
    IGST exemption only for import of concentrators for supply to state government

    "It appears that the IGST exemption is only for import of concentrators for supply to state government. The expectation was that it would cover all imports as there is again a condition for availing exemption. If NGOs buy it for donating to clinics or hospitals or if relief organizations buy it for this purpose then no exemption," said Shashi Mathews, Partner, IndusLaw.

    21:46 (IST)28 May 2021
    GST Council falls short on public expectations

    "Falling short on public expectation, this GST Council meeting ended up sorting issues regarding compensation cess amongst constituent members. Key issues impacting the industry and the public yet to make it to their discussion," said Ayush Mehrotra, Partner, Khaitan & Co.

    21:00 (IST)28 May 2021
    Long term relief to small taxpayers: FM

    Finance Minister Nirmala Sitharaman added that late fees have also been rationalised. "The rationalised late fee and the decision to reduce the maximum amount of late fee for small taxpayers will come into effect for future tax periods. This will provide a long term relief to small taxpayers," she added.

    20:59 (IST)28 May 2021
    Amnesty scheme for small taxpayers

    The finance minister today said that taxpayers can now file their pending returns and avail the benefits of this Amnesty scheme with reduced late fees.

    20:55 (IST)28 May 2021
    Annual return filing will continue to be optional for this previous fiscal year: FM

    "The Annual Return filing will continue to be optional for FY 2020-21 for small taxpayers, having a turnover less than Rs 2 crores while reconciliation statements for 2020-21 will be furnished only by those taxpayers whose turnover is Rs 5 crores or more," said Finance Minister Nirmala Sitharaman.

    20:53 (IST)28 May 2021
    Centre to borrow Rs 1.58 lakh crore

    The finance minister today said that the Centre will borrow Rs 1.58 lakh crore to compensate states for the loss of revenue from GST. 

    20:40 (IST)28 May 2021
    Constantly engaging with manufacturers

    The government is constantly engaging with vaccine manufacturers across the globe, Finance Minister Nirmala Sitharaman said today. She added that vaccine production will increase in the coming months.

    20:31 (IST)28 May 2021
    Special meeting on compensation cess to be conducted

    Finance Minister said that there would be a special meeting to discuss the issue of compensation cess. The meeting will discuss the idea of extending the compensation access beyond July 2022.

    20:26 (IST)28 May 2021
    Annual return filing simplified

    Finance Minister said that the annual return filing has been simplified by the GST Council.

    20:25 (IST)28 May 2021
    GoM to be formed for covid related items

    Group of Ministers will be formed to discuss and decide on the reduction in GST on covid related items. GoM will submit its report by June 8.

    20:23 (IST)28 May 2021
    Exempt black fungus drug

    Finance Minister said that the GST Council has decided to exempt drug used to fight black fungus from GST.

    20:22 (IST)28 May 2021
    IGST exempted on certain items

    GST Council decided to exempt IGST on free covid related supplies, finance minister Nirmala Sitharaman said.

    20:19 (IST)28 May 2021
    Issue of tax on covid related items was discussed in detail

    The issue of covid related items was discussed in detail. Council decided to exempt the import of relief items even if purchased to be donated to the government. This exemption extended till August 31, 2021, said Finance Minister Nirmala Sitharaman.

    20:15 (IST)28 May 2021
    GST meet ends

    The 43rd GST Council meeting has ended. Finance Minister Nirmala Sitharaman will announce the key decisions soon. 

    19:28 (IST)28 May 2021
    Rates cuts proposed

    States have proposed rates cuts for covid testing kits, oxygen concentrators, life-saving drugs, and vaccines.

    19:24 (IST)28 May 2021
    Zero tax ruled out

    Zero tax rate on covid-related material has been ruled out at the 43rd GST Council meet, CNBC TV18 reported today.

    19:23 (IST)28 May 2021
    GST Council to meet again

    GST Council to meet again in a few days, CNBC TV18 reported. The GST Council will then deliberate on taxes on covid treatment-related material.

    19:21 (IST)28 May 2021
    GST on vaccine maintained

    GST rate of 5% has been maintained on covid-19 vaccines, CNBC TV18 reported. Some states had asked for this to be reduced.  

    19:02 (IST)28 May 2021
    GST Compensation

    GST Compensation issue discussed at the GST Council meeting today, CNBC TV18 reported. 

    18:54 (IST)28 May 2021
    GST Council mulls tax on vaccines and other essential equipment

    "Impact of GST on essential medicines and equipment required for fighting the pandemic can be effectively resolved by treating them as zero-rating those supplies. Any proposal for tax exemption of these will only provide partial relief as the GST paid across the supply chain will become a cost," said Ayush Mehrotra, Partner, Khaitan & Co.

    18:22 (IST)28 May 2021
    GST meeting at an opportune time

    "The GST Council meeting comes at an opportune time when both, the industry and the public is struggling with the stress of the pandemic. While the industry seeks compliance exemptions, the general masses would look out for reduction of tax impact on essential medicines and equipment," said Ayush Mehrotra, Partner Khaitan & Co.

    18:06 (IST)28 May 2021
    Sikkim proposes covid cess in GST meet

    Sikkim has proposed a covid cess to be levied at the GST council meeting being held today, CNBC TV18 reported. Reports suggest other states too have backed the same.

    17:54 (IST)28 May 2021
    Debutants on the block

    Today’s meeting is also being attended by five new members. Finance ministers of Assam, Bihar, Kerala, and Tamil Nadu, and Puducherry Chief Minister Rangaswamy are attending their first-ever GST Council meeting.

    17:07 (IST)28 May 2021
    How to go around GST on vaccines?

    "A concessional GST rate of 1% can be levied for COVID-19 vaccines. Suppliers would be allowed GST credit benefit, which could be claimed as refund under 'inverted duty structure refund', typically claimed by pharmaceutical companies," said Saket Patawari, Executive Director–Indirect Tax, Nexdigm.

    16:42 (IST)28 May 2021
    Demand for removal of GST on life-saving drugs increase

    Priyanka Gandhi Vadra has asked the Finance Minister to remove GST imposed on life-saving medicines and critical equipment being used to fight the coronavirus pandemic. Taking to Twitter, the Congress general secretary shared a list of items with the GST rates imposed on them, calling for the removal of the tax.

    16:23 (IST)28 May 2021
    GST relief for oxygen concentrators in the offing?

    "The GST Council meeting today is happening after a long break. The meeting happening for the first time after October 2020, is in the background of the raging second wave of the pandemic. In line with this, the most important agenda of today’s meeting will be exemptions or concessions on various medicines, medical equipment and health services to support the fight. Further considering the number of petitions filed in High Courts and the Supreme Court, there is an expectation that relief will be given for import of oxygen concentrators and similar items. Additionally, there is also a growing demand for extension of the compliance deadlines and considering the lockdowns in different states, there is an expectation that some relief will come on this front," Shashi Mathews, Partner, IndusLaw.

    13:00 (IST)28 May 2021
    GST supply chain can remain under tax at 5%

    "The GST supply chain can remain under tax at 5%. However, this can be separately refunded back to the manufacturers or the suppliers selling to unregistered customers, similar to the one allowed in case of exports but the current GST legislation may not allow such refund. Hence, it can be separately provided by the Government outside of GST legislation if we have to reduce the impact, like a special incentive package/scheme. This is subject to non-collection of said GST from such unregistered customers," said Saket Patawari, Executive Director–Indirect Tax, Nexdigm.

    12:39 (IST)28 May 2021
    Second wave of covid to hit state revenues

    The second wave of covid-19 and the resultant lockdowns are likely to impact the revenues of state governments. This could lead to states asking for a higher compensation from the Central government.

    12:23 (IST)28 May 2021
    Would GST exemption be helpful?

    'Under value added tax like GST, exemption may have negative impact as typically credit on inputs would not be available thus becoming a cost for the business. Further, it may result in disputes on which ones to be exempted and which ones should not be. Exempting the supply chain could be counter-productive,' Saket Patawari, Executive Director–Indirect Tax, Nexdigm.

    11:52 (IST)28 May 2021
    Current tax rate on vaccine

    GST is levied at the rate of 5% on vaccines and 12% on Covid drugs and oxygen concentrators for domestic supplies and commercial import of these items. Various state government have asked that exemption be provided to vaccines and other good and services that are important for the fight against covid-19. 

    11:38 (IST)28 May 2021
    GST meeting underway

    Image

    ~ Ministry of Finance 

    11:35 (IST)28 May 2021
    Concerns surrounding GST exemption on vaccines

    News agency PTI report that the Fitment Committee on GST rates, comprising tax officers of Centre and states, has given its report to the Council listing out the pros and cons of waiver and zero-rating of Covid vaccines, drugs and other equipment. Exempting final products from GST would deny manufacturers the option to claim the benefit of the input tax credit on raw materials and hence not much benefit accrues to consumers.

    11:22 (IST)28 May 2021
    Punjab sees shortfall in assured GST revenues widening to 60% in FY22

    Punjab, which was seeing GST revenue shortfall of close to 50% of the assured revenue, fears that its shortfall will further widen to 60% in FY22, the state’s finance minister Manpreet Singh Badal has said in a letter to union finance minister Nirmala Sitharaman ahead of the GST Council meeting on Friday.

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    11:17 (IST)28 May 2021
    Recent GST Collections

    In the month of April, GST Collections stood at Rs 1.41 lakh crore, a record high. In March, GST collections were at Rs 1.23 lakh crore. 

    10:55 (IST)28 May 2021
    States want Centre to borrow to bridge shortfall

    In a letter to Sitharaman on May 12, West Bengal finance minister Amit Mitra had written that the Centre’s ‘estimate’ of Rs 1.56 lakh crore as GST compensation fund shortfall for FY22 will need to be revised upward again. “Due to Covid Wave-2 and lockdowns, the compensation will be much higher than what was projected earlier,” Mitra wrote. Many opposition states including Kerala want the Centre to borrow to bridge the shortfall in compensation cess this year as well.

    10:35 (IST)28 May 2021
    Can lower GST on vaccine lead to lower prices?

    “A deeper analysis is required to decide whether a GST exemption will actually decrease the price of vaccine or not, as counter-intuitive as it may appear. Ideally, a low nominal GST rate of 0.1% could potentially lead to a lower price for vaccines,” said Sandeep Jhunjhunwala, partner, Nangia Andersen LLP.

    10:25 (IST)28 May 2021
    Vaccine tax exemption

    “If full exemption from GST were given, the domestic producers of these items would be unable to offset taxes paid on their inputs and input services and would pass these on to the end consumers by increasing their price,” finance minister Nirmala Sitharaman had said on May 9, in her response to West Bengal chief minister Mamata Banerjee’s letter on the subject to Prime Minister. Banerjee in her letter had sought exemption from GST/Customs duty and other duties and taxes on some items and Covid-related drugs.

    10:24 (IST)28 May 2021
    Compensation shortfall

    State Finance Ministers are expected to raise concerns around compensation shortfall. The Council may deliberate on a likely higher shortfall in GST compensation cess receipts in FY22 with many states demanding that the Centre borrow and transfer the amount to states to bridge the gap like it did last year.

    10:24 (IST)28 May 2021
    Vaccine tax exemption on agenda

    The GST Council is likely to discuss the tax rate on vaccines during its meeting. Various state government have already demanded that GST exemption for vaccines. However, the government has underlined issues of input tax credit if vaccines are exempted.

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