The Goods and Services Tax (GST) Council on Friday decided to tax online food delivery operators such as Swiggy and Zomato on behalf of restaurants from January 2022.

       The Council, chaired by Union Finance Minister Nirmala Sitharaman, also exempted expensive life-saving drugs from indirect tax, extended concessional rates on Covid-related drugs for three more months, and addressed the issue of inverted duty structure in textiles, footwear, pens, specified renewable energy devices, and parts of locomotives, among other items. However, the Council decided against bringing petroleum products under the GST regime for now, she said while addressing the media after the 45th GST Council Meeting held in Lucknow.

       Sitharaman said compensation to the states would not be extended beyond June 2022, citing revenue concerns. Many states said they wanted its extension but did not press for it since the issue was not elaborately discussed. She, however, explained the need for extending compensation cess till March 2026, saying the Centre has to service the principal and interest on loans that were taken to compensate the states after Covid-19 hit the collection last year and this year.

       The cess imposed on automobiles and cigarettes, which draw the peak rate of 28 per cent, is to expire on June 30, 2022. The compensation mechanism itself will expire on June 30, 2022. The states are given full compensation for the first five years of the introduction of GST on the assumed revenue growth rate of 14 per cent on the base year of 2015-16.

       The fitment panel, comprising central and state officers, estimated a GST revenue loss of Rs 2,000 crore in 2019-20 and 2020-21.

       As such, it recommended a 5 per cent rate on online food delivery operators without input tax credit. Many restaurants were found to be not depositing GST with the government, while some were not even registered.

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       The finance minister said the states were explained the revenue position from GST. “At the time of GST, revenue neutral rate (RNR) was 15 per cent; now it has come down to 11.6 per cent,” she said.

       The Council will go to the Kerala High Court and apprise it of the position of the states regarding the inclusion of petroleum in GST, she said. The court had suggested that such a proposal be placed before the Council after a writ petition was filed for the inclusion.

       Sitharaman said life-saving drugs such as Zolgensma and Viltepso that are priced at about Rs 16 crore and used for curing muscle atrophy would be exempted from GST if imported for personal use. Besides, reduced GST on remdesivir as well as concessional rates of the tax on other Covid-related drugs will be extended till December 31. However, the concessional rate on equipment used to cure Covid will expire this month. Also, GST on drugs such as Keytruba would be reduced from 12 per cent to 5 per cent.

       The Council also reduced GST on biodiesel supplied to oil-marketing companies from 12 per cent to 5 per cent.

       It also exempted transport of goods for export purposes by vessel and air for one more year to help exporters, the finance minister said. She said such exemption would also be made available to special economic zones. The Council also exempted aircraft and other goods imported on lease from integrated goods and service tax to address the issue of double taxation.