The Goods and Services Tax Council decided on Saturday to cut GST rates on Covid drugs, test kits, medical devices and even ambulances to help people amid the pandemic, but left the tax on vaccines unchanged at the lowest levels of 5%. The new tariffs are valid until September 30th.
While some state finance ministers, including Amit Mitra from West Bengal and Manpreet Singh Badal from Punjab, called for a temporary tax exemption for all Covid drugs, vaccines and equipment, a group of ministers led by Meghalaya chief minister Conrad Sangma recommended a cut in GST- Sentences for items other than vaccines.
The Union government believes that vaccine tax breaks are superfluous as they are mostly made available to people free of charge through government channels, while there is no guarantee that the private sector will pass the tax breaks on to the intended beneficiaries.
However, the council has exempted the immunosuppressant tocilizumab and the mucomycosis drug amphotericin B from the GST. “The GOM recommendations contained a lot of substance … the Council of course agreed to follow the GOM recommendations subject to minor adjustments,” said Finance Minister Nirmala Sitharaman.
Although the GoM recommended keeping GST rates for ambulances at 28% and those for temperature control devices at 18%, the council lowered them to 12% and 5%, respectively. The council also reduced the GST rate from 18% for electric ovens in the crematoria to 5%, while the government recommended that the government lower it to 12%. The GST’s rate adjustment panel had also proposed not to change the tax on vaccines while rates on some drugs and equipment were lowered.
Punjab’s Finance Minister Manpreet Singh Badal tweeted: “Trying to select exemptions based on a reversed tariff structure or cheaper imports would destroy the foundation of the #GST. GST on # COVID-19 preventive materials, masks, PPE, hand sanitizer, medical-grade oxygen, test kits, ventilators, bipap devices and pulse oximeters is insensitive.
“There is no problem with people (taxing vaccines) because they don’t pay taxes … it’s free for them,” said Finance Minister Tarun Bajaj.
On Monday, Prime Minister Narendra Modi announced that the Union government will buy 75% of vaccinations from vaccine manufacturers, including 25% of the state quota, and make it available to state governments for vaccination free of charge.
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