Practical Analysis of Decisions Taken In 43rd GST Council Meeting

After a long hiatus of nearly 8 months, the GST Council meeting was convened on 28th May 2021.

On the agenda were important expected items such as waiver of tax on various medicines, medical equipment, and health services. Several states had proposed a complete tax waiver on COVID vaccines, oxygen cylinders, oxygen concentrators, oximeters, etc. Several states had also demanded that the GST compensation revenue be continued beyond 2022 when the compensation period comes to an end.

Post the meeting, however, as expected, only some of these suggestions were taken into account. Here’s a roundup –

COVID-19 and Healthcare Relief

Most COVID-19 related goods such as medical oxygen, oxygen concentrators, and other oxygen storage and transportation equipment, certain diagnostic markers test kits and vaccines, etc. were recommended to be fully exempted from IGST, for donating to the government or on the recommendation of state authorities or relief agencies. The said exemption would even if the goods have been imported upon payment basis. Similar measures have also been taken for the drug Amphotericin B, a drug that helps in the treatment of the black fungus (mucormycosis) disease.

Apart from this, to battle the Lymphatic Filariasis epidemic, the GST rates on Diethylcarbamazine tablets were recommended to be reduced from 12% to 5%. India carries over 40% of this particular preventable and treatable disease in the world,[1] and some scholars argue that the elimination of the disease from India could lead to eradication around the world.[2]

In Gurcharan Singh v. Ministry of Finance, the Hon’ble Delhi High Court had recently held that the classification between individual persons receiving a gifted supply from abroad and the state government receiving such supply was violative of Article 14 and there was no reasonable basis behind such classification. Whether the new notification for effecting this recommendation makes such distinction between individuals and the catalyzing agency remains to be seen.

The above-mentioned decisions are definitely a step in the right direction. However, it would be prudent to extend the above-said exemption to all medicines and medical equipment that is required to be imported for treatment of patients suffering from COVID-19 or any complication arising post recovering from COVID-19 such as the black fungal epidemic e.g. the antibody cocktail recently developed by Roche as a treatment for COVID-19 or Posaconazole for treatment of fungal infections.

Further, similar steps can also be taken for other life-threatening disease medications and therapies. Ultra-expensive drugs such as Zolgensma, a drug which can only be imported from and costs ₹18 crores includes ₹6 crores as IGST. IGST on life-saving drugs and therapies and services should be considered to be removed from the tax net, especially if no alternative is available domestically.

All eyes are now set on the report of the Group of Ministers (GoM) expected on 8th June 2021.

Sectoral Specific Decisions

Real Estate

For the real estate sector, it was recommended that suitable amendments be made in relevant notifications to clarify that landowner promoters could utilize the credit of GST charged to them by developer promoters in respect of such apartments that are subsequently sold by the land promoter and on which GST is paid.

This clarification comes as a relief to the already stressed real estate sector and would ease the cash flow burden on landowner promoters.


The Council decided to clarify that GST is payable on annuity payments received as deferred payments for construction of roads. The benefit of the exemption entry shall be available only for such annuities which are paid for the service by way of access to a road or a bridge.

The lack of clarity on exemption on annuity payments for road construction has been an ongoing issue for many contractors especially since the relevant extracts of GST Council Minutes gave an impression that such an exemption was available against annuity payments for construction of the road as well. It would be appreciable if the Council can also provide an appropriate remedial framework for those contractors who have erroneously availed such an exemption and also reversed proportionate Input Tax Credit.

The Council further clarified that services supplied to a government entity by way of construction of a rope-way attract GST at the rate of 18%.


Services supplied to an educational institution including Anganwadi (which provide pre-school education also), by way of serving of food including mid-day meals under any midday meals scheme, sponsored by the Government were recommended to be exempt from levy of GST irrespective of funding of such supplies from government grants or corporate donations. This recommendation is primarily of a clarificatory nature as it states that it is not relevant whether the mid-day meal scheme sponsored by the government is funded by grants or by corporate donations.

Similarly, another clarificatory recommendation was for services provided by way of examination by the National Board of Examinations and other Central or State educational boards to be exempt from GST. This came in response to NEET aspirants complaining about raised application fees for the exam, which also included 18% GST and was significantly more expensive than other exams, at more than ₹5000 for unreserved students.[3]

Aviation & Shipping

A number of recommendations have been put forth by the Council for industries. Firstly, the government had emphasized India has a hub for MRO (maintenance, repair, and overhaul) for airlines in the Finance Minister’s stimulus package speech.[4] GST was hence reduced in March of 2020 to 5% with full ITC for MRO services of aircraft.[5] Now, the same benefits have been recommended for MRO services on ships and vessels as well from 18% to 5%. As the recommendations highlighted, this is a positive effort to allow domestic players a level-playing field and be instrumental in aiming for a global MRO hub.


It has been a significant matter of contention between the GST Intelligence and The Flour Mills whether the “crushing of whole, unpolished grain” service provided to Governments shall be liable to GST as a supply of services or not and was put forth before the Authority for Advance Ruling, West Bengal.[6] It was recommended to be clarified that such items would be exempt from GST if the value of the goods in such composite supply does not exceed 25%. Otherwise, such services would attract GST at the rate of 5% if supplied to any person registered in GST, including a person registered for payment of TDS.

Trade Facilitation Measures

A number of measures have been taken in respect of late fees and last payment dates. In respect of the Amnesty Scheme, the late fee for non-furnishing of Form GSTR-3B has been reduced. Similarly, the late fee for delay in furnishing from GSTR-3B and GSTR-1 has been capped for those imposed under section 47 of the CGST Act.

Further, COVID-19 related relief measures are being provided for each group of taxpayers including but not limited to a reduction in rates of interests on challan, waivers of late fees, and extensions of due dates for filing of certain forms.

Lastly, certain amendments under sections 35 and 44 of the CGST have been recommended to be notified to help ease compliance requirements and self-certification of reconciliation statements.


While significant measures had already been taken in respect of COVID-19, it is refreshing to see the prompt response in respect of the medicine for the black fungus epidemic. Extensions and reductions of fines and late fee payments are likely to please most taxpayers as well. Many of the clarifications are also to help remove confusion, especially with respect to the PDS systems issue.

However, there is yet to be any information on compensation cess to states who have experienced significantly less revenue in the past year. Last year, the central government made up for the shortfall of revenue by extending loans to the tune of ₹1.1 lakh crores to the states. This year, the central government is looking to borrow from the market, as compensation of over ₹2.7 lakh crores may be required. The FM has promised another meeting this quarter to discuss the issue of compensation period extension.

Author: Suyash Bajpai, a student of National Law University Odisha, Cuttack (intern) and Anubhav Gupta (Principal Associate- Taxation) at Khurana & Khurana, Advocates and IP Attorneys.  In case of any queries please contact/write back to us at and/or +91-9971433007.

[1]Hoti S, “Filariasis of Uncommon Nature in India” (National Centre for Biotechnology Information, US National Library of MedicineJanuary 2012) <>.

[2]Senthilingam M, “Every Last Worm: Eliminating Elephantiasis in India” (CNNApril 24, 2015) <>

[3]Abidi FA, “National Board of Examinations Hikes NEET PG 2021 Exam Fee” (The Wire ScienceFebruary 26, 2021) <>

[4]“India to Become Global Hub for Aircraft Maintenance, Repair, and Overhaul (MRO): Govt” (News18.comMay 16, 2020) <>

[5]Notification No. 02/2020- Central Tax (Rate), Government of India Ministry of Finance (Department of Revenue) <>

[6] In Re Sakshi Jhajharia, Order No 41 of WBAAR/2020-21.



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