Tax rates on 14 Covid relief items slashed from 12% to 5%
The Goods and Services Tax (GST) has been waived for two critical drugs against Covid-19 and black fungus Tocilizumab and Amphotericin B. Tax rates have been reduced to 5 per cent on 14 major pandemic relief goods, including testing kits and hand sanitisers, from prevailing rates in the range of 12 per cent and 18 per cent.
The 44th GST Council meeting on Saturday also decided to slash tax rates on medicines and equipment used for the treatment of Covid-19
A notification to this effect will be issued within a day or two. The 5 per cent 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 reduced rates, which Revenue Secretary Tarun Bajaj said were aimed at providing some succour to the people amid the pandemic, will remain effective till September 30, but could be extended further based on later assessments. The decision to slash tax rates was based on a recommendation of a Group of Ministers, headed by Meghalaya Deputy Chief Minister Conrad Sangma, and would remain effective till September 30, 2021.
The GST rate on Covid-19 drug Tocilizumab and black fungus medicine Amphotericin B will be reduced to nil from the existing 5 per cent. The GST rate on Remdesivir and anticoagulants like Heparin is lowered from 12 per cent to 5 per cent. The GST rate on ambulances has been cut to 12 per cent from 28 per cent. Tax on medical grade oxygen, oxygen concentrator (including personal imports), ventilators, BiPAP machines and high flow nasal cannula (HFNC) devices has been cut to 5 per cent from 12 per cent.
Hand sanitisers, temperature check equipment, gas/electric furnaces for crematoriums too will attract a lower 5 per cent tax, compared to 18 per cent earlier.
The GST rates on Covid-19 testing kits, inflammatory diagnostic kits like D-Dimer, IL-6, and Ferritin, and pulse oximeters slashed down from 12 per cent to 5 per cent. The GST on ambulances is proposed to be reduced from 28 per cent to 12 per cent.
The GST) rate on Covid vaccines was, however, retained at 5 per cent as the Council felt that majority of the vaccine procurement was being done by the Centre and given free to people. Explaining the 5 per cent levy on vaccines, Union Finance Minister Nirmala Sitharaman said that the 5 per cent levy will not put any additional burden on the common man as the Government was procuring all vaccines and giving them to citizens for free.
“It was felt that the GoM’s recommendations have brought in a lot of substantial change. Many items, which were at 18 per cent and 12 per cent, brought down to 5 per cent. So there was a lot of substance in the recommendation made by GoM. The Council largely agreed to go with GoM’s recommendation...,” Sitharaman said while briefing reporters after the 44th GST Council meeting.
“Central government is purchasing 75 per cent and is paying GST also. But the impact of this GST on people will be nil since people would be getting vaccines free of cost at government hospitals. Centre is purchasing and it is given free to people,” said Sitharaman.
Revenue Secretary Tarun Bajaj said vaccines would continue to attract 5 per cent rate and the GST Council discussed that the Centre is purchasing all the vaccines -- at least 75 per cent is being purchased by the Centre. “The GST will also be borne by the Centre. But out of the income from GST, 70 per cent will be shared with the states... As far as people are concerned who are coming to get their inoculation done, it is tax free. It is not an issue with the people, they are not paying any tax, cost of the vaccine. So it is free for them,” Bajaj said.
In the previous meeting of the GST Council on May 28, taxes on COVID-19 vaccines and medical supplies were left unchanged after the BJP- and Opposition-ruled States sparred over whether the tax cut benefits will reach the common man. An 8-member GoM, under Sangma, was set up to recommend GST rate on Covid essentials.
The other members of the GoM are Gujarat Deputy Chief Minister Nitinbhai Patel, Maharashtra Deputy Chief Minister Ajit Pawar, Goa Transport Minister Mauvin Godinho, Finance Ministers of Kerala (K N Balagopal), Odisha (Niranjan Pujari), Telangana (T Harish Rao) and UP (Suresh Kr Khanna).
In the Council, the three Congress Ministers said that in the future at least you should consider having us in GoM. The selection into a GoM is never made on a party basis, neither is the exclusion. There are several GoMs and several Ministers are made members of the GoM. All States are given representation in one or the other GoM. Neither the inclusion nor the exclusions happen on political party affiliations.”