Covid medicines cheaper, food delivery firms liable for paying tax

Current GK ( Master) Growth and development

18-Sep-21

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The Council, which held an in-person meeting after 20 months, also decided to continue compensation cess levy only for repayment of borrowed amounts beyond June 2022.Rate cuts for a number of cancer and Covid-related medicines and a shift in tax payment liability to restaurant delivery aggregators such as Swiggy, Zomato, and cloud kitchen operators instead of restaurants, were two of the key decisions taken by the Goods and Services Tax (GST) Council in its meeting in Lucknow on Friday.
The Council, which held an in-person meeting after 20 months, also decided to continue compensation cess levy only for repayment of borrowed amounts beyond June 2022.A proposal to bring petroleum products under the indirect tax regime was discussed, but it was decided to keep the proposal out of its ambit for now.Going ahead, the Council will look at rate rationalisation under the inverted duty structure, and compliance measures through e-way bill and composition schemes, for which two Groups of Ministers will be constituted.
Finance Minister Nirmala Sitharaman said the rate-cut relief given in the previous Council meeting for Covid-related medicines such as Remdesivir, Tocilizumab, Amphotericin B, and anti-coagulants like Heparin will continue till December 31. However, the concessional tax for medical equipment will end on September 30.
The Council also decided to remove GST on the import of muscular atrophy drugs like Zolgensma and Viltepso, which cost crores of rupees, Sitharaman said. The GST rate for Keytruda, used for the treatment of cancer, has been cut to 5 per cent from 12 per cent.Effective January 1 next year, the Council has decided to make e-commerce operators engaged in restaurant services liable for payment of tax. This will essentially shift the responsibility of paying the 5 per cent GST to the aggregators from the restaurants.“Food delivery operators like Swiggy who collect orders from restaurants and deliver ; the place where the food is delivered will be the point on which tax will be collected by the gig groups Swiggy and others,” Sitharaman said.
Revenue Secretary Tarun Bajaj said, “There is no extra tax, there is no new tax. The tax was payable by restaurants, now instead of restaurants, the tax will be payable by aggregators which will also,prevent revenue leakage.”The Council also decided to put an end date of June 2022 to the compensation mechanism, as mandated in law. The levy of compensation cess will continue from July 2022 onwards till March 2026 to service the borrowing, which had been resorted to in order to bridge the compensation gap in the years 2020-21 and 2021-22.The debt for making compensation payments to states is estimated to be around Rs 2.7 lakh crore, a senior Finance Ministry official said.Sitharaman said that at the previous GST Council meeting, it had been decided that beyond July 2022, the collection of cess would be for “payment of loans taken”.

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