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GST brought down on 14 COVID relief goods

Union Finance Minister Nirmala Sitharaman with MoS Anurag Thakur addressing a news conference over meeting of GST Council to discuss tax cut on Covid essentials, at National Media Center in New Delhi on Saturday.   | Photo Credit: SHIV KUMAR PUSHPAKAR

The Goods and Services Tax (GST) Council on Saturday decided to waive the tax levied on two critical drugs against COVID-19 and mucormycosis — tocilizumab and amphotericin B — and reset the tax rate to 5% for 14 major pandemic relief items, till September 30.

Non-BJP-ruled States registered a strong dissent, terming the continued imposition of GST on critical COVID supplies and drugs as ‘insensitive’ and ‘totally anti-people’. They alleged that their proposals for zero-rating or reducing GST rates to 0.1% on critical supplies were ignored by the Union Finance Ministry at what turned out to be another stormy Council meeting.

Voice muzzled, says Bengal Finance Minister

West Bengal Finance Minister Amit Mitra said the Council’s chairperson, Union Finance Minister Nirmala Sitharaman, allowed his comments to be deleted at the behest of his Uttar Pradesh counterpart, and accused the Ministry of muzzling his voice and cutting off the virtual conference link when he was trying to voice objections.

The 5% GST levied on vaccines was left unchanged, following the recent changes in the country’s vaccine procurement strategy that puts the Union government in charge of augmenting supplies. The GST rate on Remdesivir and anti-coagulants like Heparin has been reduced from 12% to 5%. The Council recommended that the same rate be levied on any other drug that may be recommended by the Health and Family Welfare Ministry and the Department of Pharma for COVID-19 treatment.

Ms. Sitharaman announced that the Council had accepted all but three recommendations on COVID-19 supplies’ tax rates submitted by a group of ministers (GoM) under Meghalaya Chief Minister Conrad Sangma on June 6.

GST brought down on 14 COVID relief goods

Ambulances, which are currently taxed at 28%, will attract a GST levy of 12%, while temperature checking equipment and electric furnaces used in crematoriums will attract a 5% GST instead of 18%.

For oxygen concentrators, medical grade oxygen and related devices such as ventilators, BiPAP machines, the GST rate has also been brought down to 5% from 12%. The same reduction has been approved in the levies on COVID-testing kits and pulse oximeters.

The 5% rate will apply to personal imports of oxygen concentrators as well as pulse oximeters, while the 18% GST payable on hand sanitisers has been reduced to 5%.

Revenue Secretary Tarun Bajaj said the tax rate changes, to be notified over Sunday and Monday, were aimed at providing some succour to the people amid the pandemic and were not driven by revenue considerations. “When it (the GST on vaccines) was discussed, it was mentioned that the Centre is buying 75% of the vaccines and will remit the GST on it and the revenue on that will be shared 70% with the States,” Mr. Bajaj said, explaining that this will have no tax implications for people as they will receive the vaccine for free.

The rates will remain effective till September 30, but could be extended further based on later assessments.

Experts said the new rates will provide some relief to people by reducing medical treatment costs, but the limited period for which the lower rates have been proposed, is problematic. 

“While the reductions on medication and equipment are good welfare measures, curtailment of the exemption period would make it difficult for businesses to plan new investments and expand their supply chains in order to ensure that they reach all corners of the country. Businesses engaged in their manufacture and trading would hope that the period is extended beyond September,” said M.S. Mani, senior director, Deloitte India.

“This particular GST Council meeting is a single agenda meeting to discuss the recommendations of the GoM set up after our last meeting (on May 28),” Ms. Sitharaman said, stressing that no other subjects such as compensation to States were discussed. 

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Printable version | Sep 24, 2021 6:18:52 PM |

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