Tax Relief

The most recent GST investigations and their results: Tax breaks within the areas of milling, prescribed drugs, training, meals

The GST Council, at its 44th meeting, approved the GST sentences for the specified items used in Covid-19 Help and Management by April 30th

By Rajat Mohan

The government has recently published numerous clarifications on various issues in accordance with the decisions of the 43rd and 44th GST Council meetings. Many of these will have a positive impact on the general public.

Education sector

In the midst of the Covid-19 situation, it would be reasonable to say that the citizens of the country were eagerly waiting for the grant relief and benefits beyond the deadline extension. The country’s middle class has suffered considerable losses in the current situation. CBIC’s determined move to clarify the GST exemption on various services provided by central and state agencies such as the National Audit Committee (NBE) will benefit millions. CBIC clarified that GST does not apply to services provided by central or state authorities, including the NBE, in conducting exams for students, including entrance exams. This move will benefit millions of households whose communities are at different levels of education.

In addition, GST is also exempt from input services in connection with the approval or execution of examinations, such as B. Online test service, publication of results, admission card and questionnaires, etc. This further rationalizes costs for educational institutions, the benefits of which can be passed on to households.

lunch menu

The Midday Meal Scheme (“MDMS”) is the Government of India’s flagship school-based meal program. In India, 115.9 million children from vulnerable backgrounds receive meals cooked through the MDMS every school day. The GST Council also noted that catering services for educational institutions (meals including lunches) are excluded from GST, regardless of whether the institution receives money from government grants or corporate donations. Therefore, the serving of food to Anganwadi also falls under this exception, whether through government or corporate donations. This clarification on the applicability of the GST to food deliveries to anganwadis and schools will reduce the cost of such meals, especially for corporate donors. Educational institutions involved in providing such meals are cutting their GST costs and could now turn to companies to increase the budget for such donations / contributions to meet their social responsibilities. Rural India, where COVID-19 has devastated the educational ecosystem, will attract more students who are descending into a win-win situation for both businesses and students.

Milling industry

The GST Council also clarifies that no GST is applicable to the combined provision of services through the grinding of wheat into wheat flour by a person to a state government for the distribution of that wheat flour under a public distribution system. However, if the provision of services by grinding wheat into flour or paddy into rice does not qualify for the exemption because the value of the goods delivered in such a composite delivery exceeds 25%, then the applicable GST rate is 5%.

This clarification will have a positive effect on the industry as the DGGI has in many cases required a GST of 18% from taxpayers. Now taxpayers can claim the benefit after this clarification, and the material component is decided on a case-by-case basis, which must be checked through the accounting and cost sheets. Excess taxes can be refunded based on the calculation. This clarification will no doubt end any pending disputes in which the subpoena was given in connection with the milling of wheat or rice.

Pharmaceutical industry

The GST Council, at its 44th meeting, lowered the GST rates for the specified items used in Covid-19 Help and Administration by September 30, 2021 as indicated below:

  • Medication
  • Oxygen, oxygen generating devices and related medical devices
  • Test kits and machines
  • Other Covid-19-related auxiliary material

The Department of Chemicals and Fertilizers, National Pharmaceutical Pricing Authority (NPPA) instructs all manufacturers and distributors to revise the MRP of drugs / formulations for which tax / GST rates have been lowered. Recall, re-labeling, or re-labeling on the label of a container or pack of released stocks prior to the date of notification is not mandatory if manufacturers are ensuring price compliance at the retailer level by issuing a revised. can ensure price list.

While savings on medicines and related equipment are beneficial to the public, capping the exemption period would make it impossible for companies to plan new investments and expand their supply chains to ensure that relief supplies reach every corner of the country. Companies involved in the manufacture and trade of these drugs are hoping that the relief period will be extended beyond September 30th until this pandemic threat is over.

Alleviate complexities

Recent clarifications show that the spirit of the GST Council is to ease the complexities of the GST law, including the GST sentences. It is in the interest of all states and centers to ensure that taxation principles are balanced and fair. We look forward to many more clarifications on GST taxation principles in the coming months.

(Rajat Mohan is a Senior Partner at AMRG & Associates. These are the author’s own views.)

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