Govt waives IGST on import of COVID-relief material received as donation for free distribution

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Updated: May 03, 2021 10:14 PM

Last week, the government slashed IGST rate on import of oxygen concentrators for personal use to 12 per cent, from 28 per cent, for two months till June 30.

GST covidThis exemption would also cover goods already imported but lying uncleared at the Customs ports.

The government on Monday waived Integrated GST (IGST) till June 30 on import of COVID-relief material received as a donation, a move that will speed up customs clearances for such imports, including those by charitable organisations.

The Finance Ministry in a statement said the government had received several representations from charitable organisations, corporate entities, and other associations outside India seeking exemption from IGST on the import of COVID-19 relief material donated/received free of cost from outside India for free distribution.

“Accordingly, the Central Government has…granted exemption from IGST on import of such goods received free of cost for free distribution for covid relief,” it said, adding the exemption would be applicable till June 30.

This exemption will also cover goods already imported, but lying uncleared at the Customs ports.

Following this decision, Niti Aayog CEO Amitabh Kant, Revenue Secretary Tarun Bajaj and CBIC Chairman Ajit Kumar interacted with Chief Secretaries of States/UTs and briefed them on the exemption from Customs duty and IGST on specified COVID relief material.

The CBIC in a tweet said that during the meeting, state governments were also requested to set up Help Desks to facilitate donors and relief agencies and give wide publicity to the same.

“Close coordination between States and Customs was emphasised to ensure that supplies reach the end-users without delay,” it added.

State governments were also requested to immediately appoint Nodal Officers so that entities desirous of importing COVID relief material for free distribution may approach them for certification, it added.

About the meeting with state officials, Finance Minister Nirmala Sitharaman in a tweet said: “Quick follow-up action in briefing Chief Secretaries of states on today’s order of IGST exemption on specified #COVID19 relief materials (Customs duty waiver given earlier). Will speed up clearance for charitable organisations and others.”

The government has already exempted customs duty on import of a host of COVID-related relief materials, including Remdesivir injection and its APIs, Inflammatory diagnostic (markers) kits, medical-grade oxygen, oxygen therapy-related equipment such as oxygen concentrators, cryogenic transport tanks, etc, and COVID vaccines.

The IGST exemption given on Monday will be subject to nodal authorities, appointed by the state governments, authorising any entity, relief agency or statutory body, for free distribution of such relief material.

The said goods can be imported free of cost by a state government or, any entity/ relief agency/ statutory body, authorised in this regard for free distribution anywhere in India.

The importer shall before clearance of goods from Customs produce a certificate from the said nodal authorities that goods are meant for free distribution for COVID relief.

After imports, the importer shall produce, to the Deputy or Assistant Commissioner of Customs at the port within six months from the date of importation or within such extended period not exceeding nine months, a statement containing details of goods imported and distributed free of cost.

This statement shall be certified by the said nodal authority of the state government.

“This exemption shall thus enable import of the Covid relief supply imported free of cost for free distribution without payment of IGST (up to the 30th June 2021). As customs duty is already exempt, these imports will not attract any customs duty or IGST,” the ministry added.

Shardul Amarchand Mangaldas & Co Partner Rajat Bose said this is a much-needed respite provided by the central government as IGST is a cost for such organisations who are helping people with the free distribution of essential medicines and medical equipment for battling the virus.

“The Central Government should, however, go a step further and reduce the GST on local supplies of such items, while at the same time allowing input tax credit as well which will result in considerably reducing the cost of such items procured locally,” Bose added.

India’s single day COVID infections had crossed a record 4 lakh mark last week. On Monday, 3.68 lakh new infections and 3,417 deaths were reported.

Last week, the government slashed the IGST rate on the import of oxygen concentrators for personal use to 12 per cent, from 28 per cent, for two months till June 30.

Under Goods and Services Tax (GST), the tax levied on consumption of goods or rendering of service is split 50:50 between the Centre and the state. Such tax is known as Central-GST or CGST and State-GST or SGST.

On inter-state movement of goods as well as imports, an Integrated-GST or IGST is levied, which accrues to the Centre. The amount paid as IGST can be utilised by businesses for claiming credit while making CGST or SGST payments at the time of actual sale.

AMRG & Associates Senior Partner Rajat Mohan said: “Government has rightly come up with full IGST relief on import of COVID related relief material including oxygen concentrators, generators, cylinders and COVID medicines by the state government and its authorised agencies”.

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