GST slashed, cancer drugs to get cheaper

The 54th GST Council headed by Finance Minister Nirmala Sitharaman met in New Delhi on Monday and decided to reduce the GST on certain cancer drugs (Trastuzumab Deruxtecan, Osimertinib and Durvalumab) from 12 per cent to 5 per cent; cut GST prospectively from 18 per cent to 12 per cent for savoury items; and set up a Group of Ministers (GoM) on reducing tax related to medical insurance.

In another decision, universities and research centres that have been established by a law of the Central and state governments, and institutions that have obtained income tax exemption can receive research funds, both government and private. Such research-related funds would not attract taxes as they have been exempted from the GST.

Addressing the media after the meeting, Sitharaman said, “The GST Council has decided that the funds given for research and development to Central and state government universities, and those who have obtained income tax exemption would be exempted from GST.”

Delhi Education Minister Atishi had flagged the matter at a press conference on Sunday, when she said the AAP government would demand the withdrawal of GST notices to premier institutions at the GST Council meeting, and would also demand that research be kept out of the GST ambit.

In August, many premier institutions, like IIT-Delhi and Panjab University, received show-cause notices, asking them to pay the GST on the research grants received since 2017.

On the GST on insurance, the Finance Minister said, “The long speculated GST on medical and health insurance have been referred rightly to a Group of Ministers as there were several related issues.”

A GoM had been constituted and it would submit its report by the end of October, she said, adding that the GST Council would meet in November to take a call on the reduction of rate on health insurance.

The minister also announced that the council had agreed to form a GoM to decide on the future of compensation cess, set to cease after March 2026. The total cess collection stood at Rs 8,66,706 crore, she stated.

On rationalisation of rates, she said the GoM, headed by Bihar’s Deputy CM, would meet on September 23 and submit the final report.

Reports on gaming and real estate had also been submitted, which would be considered by the council.

A Committee of Secretaries, headed by Additional Secretary (Revenue), would also be formed on the IGST, which was currently facing a negative balance.

Major decisions

• GST on certain cancer drugs to be reduced from 12% to 5%
• GST on car seats to be increased from 18% to 28%
• Reverse Charge Mechanism (RCM) to be introduced on supply of metal scrap by unregistered person to registered person
• GST on savoury or salted (other than non-fried or uncooked snack pellets) items to be cut from 18% to 12%