- GST Council to meet on October 8 with a packed agenda for tax rate streamlining
- Proposal to cut GST on e-commerce and food delivery charges to a uniform 5% rate
- Input Tax Credit may be allowed for hotels, fitness centres, and restaurants at 5% GST
The Goods and Services Tax (GST) Council is set to meet on October 8, with a packed agenda aimed at streamlining tax rates, easing compliance, and providing critical clarity on Input Tax Credit (ITC) claims across multiple industries, according to sources privy to the development.
Among the most consumer-facing proposals under consideration is a potential tax cut on delivery charges levied by e-commerce and food aggregators like Swiggy and Zomato, alongside an array of targeted exemptions spanning healthcare, defence, shipping, and agriculture.
Relief For Online Food Delivery & Services Sector
In a move that could make ordering food online marginally cheaper, the GST Council is likely to consider extending a uniform 5% GST rate to all goods delivery services, including platforms like Swiggy and Zomato. At present, while the food prepared and delivered through these platforms attracts a 5% GST rate, the delivery fee charged to consumers is taxed separately under the higher 18% slab. Bringing delivery fees under the 5% umbrella would eliminate this disparity and simplify billing structures for platforms and end consumers alike.
The Council is also expected to take up long-standing requests from the hospitality, wellness, and restaurant industries. Authorities may consider allowing Input Tax Credit (ITC) for hotels, fitness centres, and restaurants currently paying a 5% GST rate, addressing a significant pain point regarding uncredited input costs.
For electric mobility, the Council is evaluating tax treatment options for EV transport and rental services:
A concessional 5% GST rate with limited ITC, or
An 18% GST rate with full ITC benefits.
However, consumers hoping for rate cuts on household consumer appliances and leisure travel may face disappointment. The Council is unlikely to reduce GST on air and water purifiers, with the 18% rate expected to continue. Similarly, cruise tourism is likely to remain in the 18% tax bracket without immediate relief.
Boost For Healthcare, Defence & Agriculture
The Oct. 8 meeting is also slated to introduce key humanitarian and strategic exemptions:
Healthcare: Seven more rare diseases are expected to be added to the list of life-saving medical treatments and drugs exempt from GST, offering critical cost relief to patients and families coping with high medical bills.
Defence: Integrated GST (IGST) exemptions are likely to be extended to imports and supplies of missile parts, spares, and testing equipment, furthering indigenous defence production and operational readiness.
Agriculture & Storage: Warehousing and storage services for seeds are poised to receive a full GST exemption, aimed at cutting storage costs for farmers and boosting the agricultural supply chain.
Clarity On Financial Services, Shipping & Social Security
The agenda also prioritises removing ambiguities in tax administration and compliance across the financial and maritime sectors:
NBFC-Bank Co-Lending: The Council is expected to clarify the GST treatment of co-lending arrangements between Non-Banking Financial Companies (NBFCs) and commercial banks, resolving persistent classification questions over service fees and interest sharing.
Mutual Funds/AMCs: Asset Management Companies' (AMC) investor awareness programmes are likely to continue under the GST net, maintaining the current tax position.
Shipping & Trade: Certain services rendered to foreign shipping lines may receive an IGST exemption, easing international shipping logistics and preventing tax cascade for global carriers operating in Indian waters.
Social Security: Services provided by the Seamen's Provident Fund Organisation (SPFO) may receive a GST exemption, bringing them on par with the Employees' Provident Fund Organisation (EPFO).
The recommendations finalised by the fitment committee will be presented before the Union Finance Minister and state finance ministers during the meeting on Wednesday, October 8, with formal notifications expected shortly thereafter.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.