Research and development grants from private or public sector to recognised educational institutions will not attract GST, the GST Council recommended on Monday. It also recommended lowering the levy on cancer drugs and namkeens and extruded or expanded savoury food products.

“R&D grant to three categories of research institution, college or university will be exempted from GST. These include recognition under State laws, Central Laws or one which has got exemption under Income Tax,” Finance Minister Nirmala Sitharaman said while giving details of recommendations made by GST Council in its 54th meeting. The exemption will be available to both government as well as private institutions and there will be no threshold, she said.

As many as seven educational institutions and universities across India received GST show-cause notices from the Directorate General of GST Intelligence (DGGI) in August, demanding unpaid taxes amounting to ₹220 crore. Now, “past demands to be regularised on ‘as is where is’ basis,” Revenue Secretary Sanjay Malhotra clarified.

According to S  Vaidhyasubramaniam, Vice-Chancellor of SASTRA University, which is one of the institutions that received show cause notice earlier, GST exemption on research grants to higher education institutions is a major boost that shall not only increase research outcome but also achieve global tax parity. “Indian academia is hugely relieved and on behalf of eligible universities & institutions,” he said.

Payment Aggregator

Malhitra clarified that 18 per cent GST will continue to be levied on service fee or transaction fee levied by payment aggregator other than bank for small digital transactions up to ₹2,000, via debit and credit cards. “As of now there is exemption for banks and that will continue,” he said. Further, demand notices of around ₹600 crore will be examined on the basis of responses submitted by these aggregators. In case, if there is demand for change in the rate, the matter may be taken up by Fitment Committee, he said.

Changes in Rates

Meanwhile, the Council recommended the GST rate on cancer drugs namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab to be reduced to 5 per cent from 12 per cent. This is in line with the budget announcement of lower custom duty, Sitharaman said.

The council recommendedhe GST rate of extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion), to be reduced to 12 per cent from 18 per cent. This isat par with namkeens, bhujia, mixture, chabena (pre-packaged and labelled) and similar edible preparations in ready for consumption. The GST rate of 5 per cent will continue on un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion.

In another significant move, the council recommended introduction of Reverse Charge Mechanism (RCM)on supply of metal scrap by unregistered person to registered person provided that the supplier shall take registration as and when it crosses threshold limit and the recipient who is liable to pay under RCM shall pay tax even if supplier is under threshold. A TDS of 2 per cent will be applicable on supply of metal scrap by registered person in B to B supply.

Pointers

Recommendations by GST Council

-         Car seats to attract 28% GST

-         Transport of passengers by helicopters to attract 5% GST

-         No GST onapproved flying training courses conducted by DGCA approved Flying Training Organizations (FTOs)

-         Location charges or Preferential Location Charges (PLC) to be bundled with construction services as composite supply

-         A pilot for B2C e-Invoicing to be introduced on voluntarily basis

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