GST: Sops on COVID meds to continue; cancer drugs tax cut

Fuel kept out of the regime; 5% levy on food delivery apps not to hit customers

The GST Council on Friday extended concessional tax rates on COVID-19 medicines, cut tax on cancer drugs and waived GST on import of highly expensive medicines for muscular atrophy, but decided to continue keeping petrol and diesel out of the uniform national tax regime.

The Council, which is headed by the Union Finance Minister and includes representatives from all states and UTs, decided to charge services by cloud kitchens and food delivery platforms like Zomato and Swiggy a 5 per cent GST. From January 1, food delivery apps will have to collect and deposit 5 per cent GST with the government, in place of restaurants, for deliveries made by them. There would be no extra tax burden on the end consumer.

In other major decisions, the regime of paying compensation to states for revenue shortfall resulting from subsuming their taxes such as VAT in the uniform national tax GST, will end in June next year. However, the cess which is currently levied on top of the GST rate on certain luxury and sin goods to fund the compensation amount for states will continue to be levied till March 2026. The collections will be used to pay off the borrowings that had to be done since 2020-21 to pay for state compensation. Sitharaman said COVID medicines such as Remdesivir and Tocilizumab will continue to be charged a concessional GST rate till December 31. More COVID treatment drugs such as Favipiravir will be charged a reduced rate of 5 per cent till December 31, she said. However, the concessional tax for medical equipment will end on September 30. GST on import of muscular atrophy drugs like Zolgensma and Viltepso, which cost crores of rupees, has been exempt, she said. The medicine Keytruda, used for the treatment of cancer, will now attract a lower 5% tax as against 12% previously.

On compensation to states, she said at the previous Council meeting it “was decided that beyond July 2022, the collection of cess would be for (re)payment of loans taken. I am referring to that compensation cess which is going to commence from July 2022 that will kick in after the regime of guaranteeing 14% revenue growth to the states ends,” she said.

Tamil Nadu on Friday opposed the idea of bringing fuel under the Goods and Services Tax (GST). “We are of the general opinion that state taxation of petrol and diesel remains one of the last vestiges of any state’s right to manage their own revenues, since the advent of GST stripped away most of the small range of rights originally written in the Constitution. As such, we are reluctant to give up any of these few remaining rights, and so are fundamentally opposed to bringing these products into the ambit of GST,” said State Finance Minister PT

Palanivel Thiaga Rajan.

Addressing the GST Council led by Union Finance Minister Nirmala Sitharaman, PTR described the Fitment Committee’s recommendation of attracting a 18 per cent GST on coconut oil when packed and sold in a unit container less than 1 litre was in bad faith and was against the interest of Tamil Nadu which was one of the largest producers of coconuts and coconut oil.

“How can you classify something which is clearly edible as effectively non-edible for the sake of levying GST? How do you decide on one whole litre as the cut-off for even considering whether something is intended for edible use or not?” he asked.