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

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.