Tax Relief: GST cut for Covid-19 test kits, drugs; no waiver for vaccines as vaccination is free in govt sector

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June 13, 2021 4:30 AM

The Union government has been of the view that tax concessions for vaccines are redundant, given that these are mostly made available free to people via government channels, while there is no guarantee that the private sector will pass on the tax reliefs to the intended beneficiaries.

In the past four years, while the reform has achieved a fair bit of maturity is some aspects, the GST child needs more nurturing on several fronts and deal with several impending challenges.In the past four years, while the reform has achieved a fair bit of maturity is some aspects, the GST child needs more nurturing on several fronts and deal with several impending challenges.

The Goods and Service Tax Council on Saturday decided to slash GST rates for Covid drugs, testing kits, medical equipment and even ambulances to provide relief to people amid the pandemic, but kept the tax on vaccines unchanged at the lowest slab of 5%. The new rates will be effective till September 30.

While some state finance ministers including West Bengal’s Amit Mitra and Punjab’s Manpreet Singh Badal pitched for a temporary waiver of tax for all Covid drugs, vaccines and equipment, a group of ministers led by Meghalaya chief minister Conrad Sangma recommended slashing of GST rates for items other than vaccines.

The Union government has been of the view that tax concessions for vaccines are redundant, given that these are mostly made available free to people via government channels, while there is no guarantee that the private sector will pass on the tax reliefs to the intended beneficiaries.

The council, however, exempted immunosuppressant Tocilizumab and mucomycosis (black fungus) drug Amphotericin B from GST. “There was a lot of substance in the recommendations made by the GOM…the Council naturally agreed to go with GOM recommendations subject of course to slight tweaking,” finance minister Nirmala Sitharaman said.

Even though the GoM recommended to retain GST rates for ambulances at 28% and that for temperature check equipment at 18%, the Council brought it down to 12% and 5%, respectively. The council also reduced the GST rate to 5% from 18% for electric furnaces in the crematoriums while the GoM’s recommendation was to cut it to 12%. The GST’s rate fitment panel had also suggested no change in the tax on vaccines while suggesting cut in the rates for some drugs and equipment.

Punjab finance minister Manpreet Singh Badal tweeted: “Attempt to pick and choose exemptions on the grounds of inverted duty structure or cheaper imports would destroy the foundation of #GST. GST on #COVID-19 preventive materials, masks, PPEs, hand sanitisers, medical grade oxygen, testing kits, ventilators, bipap machine and pulse oximeters is insensitive.”

“It’s not an issue with the people (taxation of vaccines) as they are not paying any tax… it’s free for them,” revenue secretary Tarun Bajaj said.
On Monday, Prime Minister Narendra Modi announced that the Union government will buy 75% of jabs from vaccine manufacturers, including 25% of the state quota, and give it for free to the state governments for vaccination.

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