The 45th Goods and Services Tax (GST) Council was held in person and was chaired by the finance minister Nirmala Sitharaman in Lucknow on Friday, where various decisions were taken. One of them was to not bring petroleum products under the GST regime, as the council discussed the Kerala High Court’s suggestion to bring petrol and diesel within the ambit.
“The Council members spoke very clearly that they don’t want petroleum products to be included in the GST at this time. We shall report the same to the court that the Council felt this wasn’t the time to bring petroleum products into GST,” the finance minister said. Kerala High Court’s suggestion to the Council in June was based on a writ petition filed in the court.
The compensation cess on products like automobiles will however continue to be paid by the consumers till March 2026, extended from July 2022. Sitharaman also mentioned the demands by certain States to extend the five-year period further on the 14 per cent revenue growth that was assured to them during the implementation of the GST. “Legally, compensation was to be paid for five years till July 2022 with an assured revenue for the States,” she asserted.
Speaking on the effective fall rate of the actual GST revenues, Sitharaman claimed that the tax rate has come down to 11.6 per cent in the last few years.
“A detailed presentation was made on the revenue generation aspects, correction of inverted duty structure aspects and the various ways in which the revenue-neutral position, which was 15.5 per cent at the time of introduction of GST, has steadily come down to 11.6 per cent.
Revenue neutral is to keep it at 15.5 per cent and, therefore, if revenues are coming down, and you think it is not helping the overall GST collection, what was arrived at the time of introducing GST has been, knowingly or unknowingly, brought down by the reduction in tax rates of some items,” she added.
The Council met in person for the first time after 20 months and took decisions, including continuation in the rate cuts for medicines related to cancer and Covid-19. Another decision was that the liability of collecting and depositing the tax on food would fall on the delivery platforms like Zomato and Swiggy instead of the restaurants.
The compliance burden might increase for the food aggregators and the restaurants even after the change in liability. The industry as well as the tax experts have mixed responses as there will be extra processes, budget detailing and separate books of the accounts.
Partner at Price Waterhouse & Co, LLP, Pratik Jain said, “In essence, the compliance burden is likely to be shifted to food aggregators. From a consumer perspective, there should not be a material change because consumers will still pay 5 per cent GST on food. Small restaurants, which have less than Rs 20 lakh of turnover, are exempt from GST but if food-aggregators are made responsible, perhaps GST will be applicable on the smaller restaurants too”.
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