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Group of Ministers to study GST relief for COVID essentials

Meghalaya Chief Minister Conrad Sangma, left, is the Convener of the GoM, which includes Maharashtra Deputy Chief Minister Ajit Pawar. File   | Photo Credit: PTI

The Finance Ministry on Saturday constituted a Group of Ministers (GoM) to examine possible waivers of GST levies on essential COVID-relief material, including vaccines, even as industry expressed concerns on the delay over such a critical decision amid the second wave of the pandemic.

Meghalaya Chief Minister Conrad Sangma has been designated as the Convener of the eight-member GoM, which includes the Deputy Chief Ministers of Gujarat and Maharasthra — Nitin Patel and Ajit Pawar — and has been tasked with turning in its recommendations to the GST Council by June 8.

Also read | Government puts off decision on tax relief for COVID-19 supplies

However, it may take longer for any possible relief to fructify as implementation of the group’s recommendations would need approval from the Council.

Uday Shankar, president, Federation of Indian Chambers of Commerce and Industry (FICCI), said “a quick decision” on reductions in GST rates on COVID related essentials will help India attain self-sufficiency in this hour of need. “At this juncture, we cannot afford to lose further time,” he said.

He added that FICCI has been pressing for zero rating of healthcare services for two years to cope with the pandemic’s impending waves and had hoped for a positive decision from the Council this time.

Also read | Urgent resolution of GST rate on oxygen concentrators for personal use needed, say tax experts

Kerala’s new Finance Minister K.N. Balagopal, who along with other Opposition-ruled States’ ministers had demanded tax cuts on COVID-related supplies, has been included in the GoM, along with his Telangana counterpart T. Harish Rao.

The group’s terms of reference include ascertaining the need for tax breaks on items ranging from COVID-19 treatment drugs, testing kits, oxygen-related equipment to PPE kits, N95 masks and sanitisers. Vaccines are taxed at 5%, while the GST levied on most other COVID-essential items is 12% or 18%.

Delhi’s Deputy CM Manish Sisodia had said on Friday night that BJP Finance Ministers opposed the demand for making COVID essentials tax-free ‘tooth and nail’ at the GST Council’s marathon meet held on Friday. Finance Minister Nirmala Sitharaman had said the decision to form a GoM was taken after protracted deliberations with ‘varying viewpoints’.

Also read | Industry laments inadequacy of GST compliance relaxations

Setting up a GoM on COVID-related items’ taxation is akin to a ‘missed opportunity’, said Deloitte India partner Mahesh Jaising.

“Even a middle path of reducing the GST rate to 5%, even on an interim basis, instead of a complete exemption might have been beneficial to many,” he said, adding that more was expected from the Council which met after almost eight months.

EY India tax partner Abhishek Jain termed the ‘further wait’ upto June 8 to get a final decision on additional GST exemptions for COVID relief activities as ‘disappointing’.

“Zero-rating at least the COVID management products would have reduced the cost of imports, while domestic manufacturers would have been able to avail input tax credits and utilise them against other products or claim a refund,” said Sanjay Bhutani, director of the Medical Technology Association of India.

The Finance Ministers of Odisha and Uttar Pradesh along with Goa’s Transport, Legislative Affairs and Panchayati Raj Minister Mauvin Godinho, constitute the rest of the GoM.


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Printable version | Aug 2, 2021 1:32:53 AM | https://www.thehindu.com/news/national/group-of-ministers-to-study-gst-relief-for-covid-essentials/article34679133.ece

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