GST Council Meeting: GST rates on Cancer drugs reduced from 12% to 5%

The 54th GST Council Meeting, chaired by Union Finance Minister Smt. Nirmala Sitharaman, was held on 9th September, 2024 in New Delhi. Key announcements included a reduction in the GST rate on namkeen and similar snacks, as well as a GST cut from 12% to 5% on several essential cancer drugs.

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The 54th GST Council Meeting, chaired by Union Minister for Finance & Corporate Affairs, Smt. Nirmala Sitharaman, was held today in New Delhi. The meeting was attended by various dignitaries, including Union Minister of State for Finance, Shri Pankaj Chaudhary, Chief Ministers, Deputy Chief Ministers, Finance Ministers of States and Union Territories, and senior officials of the Ministry of Finance. Several crucial recommendations were made during the meeting, focusing on tax rate changes, relief measures, trade facilitation, and compliance streamlining.

Changes in GST Tax Rates

One of the key highlights of the meeting was the decision to reduce the GST rate on extruded or expanded savory products, such as namkeens and bhujia, from 18% to 12%. This move aligns with the GST rate applicable to other similar ready-to-eat snacks under HS 2106 90. However, un-fried or uncooked snack pellets, produced through extrusion, will continue to attract a 5% GST rate.

In a move aimed at providing relief to cancer patients, the GST rate on three crucial cancer drugs—Trastuzumab Deruxtecan, Osimertinib, and Durvalumab—was slashed from 12% to 5%. This reduction is expected to ease the financial burden on individuals requiring these life-saving treatments.

Additionally, the GST Council introduced a Reverse Charge Mechanism (RCM) for the supply of metal scrap by unregistered persons to registered entities. Under this mechanism, registered buyers will be responsible for paying the tax even if the seller is below the registration threshold. This measure also includes a provision for the supplier to register once the threshold is crossed.

Industry-Specific Clarifications

Several clarifications were issued to streamline tax classifications. For instance, Roof Mounted Package Unit (RMPU) air conditioning machines for railways will now be classified under HSN 8415 and attract a GST rate of 28%. Similarly, car seats, which were previously taxed at 18%, will now be classified under 9401, with the tax rate being raised to 28%. This brings the GST on car seats in line with that of motorcycle seats, which already attract the same rate.

Furthermore, a Group of Ministers (GoM) was formed to examine GST issues related to life and health insurance. The GoM, comprising representatives from 13 states, is tasked with submitting its report by the end of October 2024. This initiative reflects the government’s commitment to addressing the concerns of the insurance sector.

Trade Facilitation Measures

To facilitate trade, the Council recommended the insertion of Rule 164 in the CGST Rules, 2017. This rule will provide guidelines for availing waivers on interest, penalties, or both, related to tax demands for the financial years 2017-18, 2018-19, and 2019-20, under section 128A of the CGST Act. Additionally, sections 118 and 150 of the Finance (No. 2) Act, 2024, which provide for amendments to section 16 of the CGST Act, 2017, will be notified soon, further aiding compliance.

The 54th GST Council Meeting underscored the government’s focus on balancing revenue needs with the concerns of businesses and consumers. The tax rate reductions on snacks and cancer drugs, coupled with industry-specific clarifications and trade facilitation measures, reflect a holistic approach aimed at fostering economic growth and simplifying compliance in the GST regime.