To provide relief to thousand of people amid the second wave of coronavirus pandemic, Union finance minister Nirmala Sitharaman on Saturday waived tax on Covid-19 essential items including medicines, equipment and hand sanitisers. The decision was taken in 44th Goods and Services Tax (GST) Council meet on June 12. The states have earlier urged the Union government to consider tax relief on COVID-19 essentials.
COVID-19 drug Tocilizumab and black fungus medicine Amphotericin B will not attract any GST tax from now on. The tax on Remdesivir has been cut to 5% from the 12 per cent. Anti-coagulants like Heparin will also come under 5% GST tax bracket. There will 5 per cent GST on any other drug recommended by ministry of health and family welfare (MoHFW) and deptartment of Pharma (DoP) for Covid treatment.
GST on medical grade oxygen, oxygen concentrators, ventilators, BiPAP machines and high flow nasal cannula (HFNC) devices has been cut to 5 per cent from 12 per cent, Finance Minister Nirmala Sitharaman said. Also, tax on Covid testing kits has been brought down to 5 per cent from 12 per cent.
“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 30th September,” said M S Mani, senior director, Deloitte India.
During the previous GST Council meeting, the states asked the finance minister to provide tax relief on Covid-19 essentials — PPE kits, masks, vaccines and medicines. Finance minister constituted a Group of Ministers (GoM) to examine possible waivers of GST levies essential supplies. Meghalaya chief minister Conrad Sangma has been designated as the convener of the eight-member GoM had tasked to submit its recommendations to the council by June 8.
The GoM submitted its report on June 7. It has suggested rate cut on some COVID essentials to 5 per cent and no change in tax rate on vaccines, according to reports. Following the recommendation, the 5 per cent GST on Covid vaccine remained same.
“These rate reductions or exemptions shall remain in force till September 30, 2021,” Union ministry of finance said in a statement.
“Today’s meeting was with single point agenda of considering the recommendations of GoM constituted to recommend rate cut on covid medicine and allied items. The GST council largely agreed to the recommendations put forth by the GoM. The reduced rate shall be applicable till 30.09.21,” said Vineet Nagla, partner, White & Brief Advocates and Solicitors.
“One big relief to common man would be the reduction of GST Rate on Hand sanitizers and thermometers by 13%. Now it is to be seen whether this benefit is passed on to the consumers and the mechanism by which the same would be checked by the Government. The reduction will only apply till 30th September, 2021 which leads to the fact that the government does not wish to create a further burden on the already burdened exchequer due to deplete tax revenues,” said Vivek Jalan, partner, Tax Connect Advisory, a multi-disciplinary tax consultancy firm.
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