FM: Not the time to bring petrol, diesel under GST
Issue was taken up on GST Council’s agenda only in view of directives of Kerala high court but many members didn’t want this, says FM
LUCKNOW/NEW DELHI: The apex federal body on indirect tax matters, the Goods and Service Tax (GST) Council, on Friday unanimously decided against bringing petroleum products -- petrol, diesel, natural gas and aviation turbine
fuel (ATF) – under the ambit of GST on revenue considerations.
“This is not the time to bring them under the GST,” Union finance minister Nirmala
Sitharaman said, briefing reporters after chairing the 45th meeting of the GST Council in Lucknow.
Sitharaman also said the issue was taken up on the GST Council’s agenda only in view of the directives of the Kerala high court that asked the council to consider the matter. She said many members said they didn’t want this and the council will report back to the Kerala high court.
“It was brought on to the table for discussion. Members spoke very clearly that they wouldn’t want it to be included in the GST,” she said.
HT had reported that includ
ing petroleum products in GST would be brought before the Council for discussion and decision on September 17 as per the direction of the Kerala high court that had in June issued directions to decide on including petrol and diesel under the ambit of GST.
Sitharaman also said a number of “people centric” decisions were taken at the GST Council meeting that met physically after a gap of nearly two years. The council decided to exempt life-saving drugs like Zolgensma and Viltepso that are used in the treatment of spinal-muscular atrophy as these medicines cost crores of rupees, she said.
The Union finance minister also said the council decided to extend the existing concessional GST rates on Covid-19 related drugs (not equipment) to December 31, 2021. The exemptions on medical equipment will end on September 30.
She also said the GST rates on retro-fitment kits for vehicles used by the persons with special abilities have been reduced to 5 per cent.
GST on biodiesel supplied to oil marketing companies for blending with diesel has been reduced from 12% to 5%.
The GST Council also decided that food delivery aggregators like Swiggy and Zomato would now be responsible for the collection of GST from consumers instead of the restaurants from where the food is bought. A decision in this regard has been taken following reports that some restaurants were either not depositing the tax or it disappeared after collection of GST from the consumers.
“This is no new tax,” said Sitharaman. The move will not impact the end consumer, revenue secretary Tarun Bajaj said.
About the extension of deadline for compensation to states for the shortfall in their GST collections beyond July 2022, she said the law provided the compensation against shortfall in GST for five years. She said the cess to be collected after July 2022 (up to March 31, 2026) would be used for the purpose of payment of loan and interest taken last year or this year due to shortfall in the revenue. A number of states have been demanding that the deadline be extended for five more years.
“We demanded extension of the deadline for payment of compensation to states beyond five years,” said West Bengal minister of state (independent charge) for urban and municipal affairs Chandrima Bhattacharya.
The GST Council decided to set up two Groups of Ministers (GoMs). Sitharaman said one of the GoMs has been constituted to look into the issue of rate rationalisation. She said there were clear anomalies in the structure as rates have gone up and down. The second GoM would look into the issue of e-way bills, FASTags, technology and compliances etc. Both the GoMs have been given two months’ time to submit their report. Import of leased aircraft has also been exempted from payment of integrated GST (IGST). IGST is levied on interstate transfer of goods and services and it is shared between the Centre and the state. All imports are treated as interstate supplies and accordingly IGST is levied on them in addition to the applicable custom duties.
Tax rationalisation, mainly undertaken to correct duty anomalies so that manufacturers get full input tax credit, made few items costlier. They are -- ores and concentrates of metals such as iron, copper, aluminium and zinc as they have been moved from 5% slab to 18%. Specified renewable energy devices and parts will now attract 12% GST instead of 5%.
Sitharaman said the Council has also decided to correct long-pending issue of inverted duty structure suffered by footwear and textiles sectors.
“GST rate changes in order to correct inverted duty structure, in footwear and textiles sector, as was discussed in earlier GST council meeting and was deferred for an appropriate time, will be implemented with effect from January 1, 2022,” she said.