GST Council also exempts IGST on black fungus drug, Covid materials meant for donation
The 43rd GST Council on Friday took several important decisions, including an amnesty scheme for small and medium taxpayers to reduce late fee burden on them.
The GST Council, which is headed by the Union Finance Minister and comprises representatives of all States and Union Territories, exempted levy of IGST on import of Amphotericin-B, which is used for the treatment of black fungus. However, the GST Council left taxes on Covid-19 vaccines and medical supplies unchanged.
Currently, Covid vaccines attract 5 per cent GST.
A group of Ministers will deliberate on tax structure on the vaccine and Covid-related medical supplies, Finance Minister Nirmala Sitharaman told reporters after the meeting of the GST Council.
Sitharaman said the Council decided to continue with the waiver of IGST on free Covid-19 related supplies imported from abroad.
“The Council has decided to exempt the import of relief items even if they are purchased if they are meant for donations to State Governments. This exemption has been extended till August 31. So far, the IGST exemption was available only when you were importing free of cost,” said FM.
“The ad hoc exemption has been extended till August 31. While that applied to imports received for free for donation, the decision is that if somebody wants to purchase these things from abroad and donate them in the country, they can also avail the exemption,” said Revenue Secretary Tarun Bajaj.
The Centre will borrow `1.58 trillion in FY22 to compensate states for loss of revenue from GST, added the Minister.
A special session of the Council will be held soon to consider extending the five-year GST shortfall compensation period to states beyond 2022, she said. “We are on the last of the five years of GST compensation to states. I have assured the members that there will be a special session only to discuss that one agenda on how long the compensation cess will be collected beyond July 2022,” said the FM.
“On compensation, we have told the Council if we adopt the same formula as last year, the gap is about Rs 1.58 trillion at a macro level. Unlike last year, when there was a complete lockdown, this time, the economy is not suffering as much. Even if we manage to collect Rs 1.1 trillion per month, we will have a deficit of about Rs 1.5 trillion. This deficit may go down to Rs 1.25 trillion if collections improve to Rs 1.15 trillion a month,” said Bajaj.
The borrowing amount would be retained at Rs 1.58 trillion to ensure that the states get the residual dues from last year to that extent, added Bajaj.
She also announced an amnesty scheme for those who missed out on GST payment. Late fee has been reduced for past period and also rationalised for future for small taxpayers, said FM.
“One of the biggest decisions today is reduction of compliance burden of small taxpayers and medium-sized taxpayers. Late fee, amnesty-related matters have also been decided upon. To provide relief to small taxpayers, an amnesty scheme has been recommended for reducing late fee payable in these cases. Taxpayers can now file their pending returns and avail the benefits of this amnesty scheme with reduced late fees. 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,” said Sitharaman.
“Annual return filing has also been simplified. The Council has recommended amending the CGST Act to allow for self-certification of reconciliation statements, instead of getting it certified by chartered accountants. The annual return filing will continue to be optional for FY21 for small taxpayers, having a turnover less than Rs 2 crore while reconciliation statements for 2020-21 will be furnished only by those taxpayers whose turnover is Rs 5 crore or more,” added Sitharaman.
