GST Council cuts tax on Covid-19 medicines, equipment

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The GST Council on Saturday decided to slash the Goods and Services Tax (GST) rates that are levied on a host of products such as medicines, devices and consumables necessary for the treatment of Covid-19 and Black Fungus to provide some relief to the common man sandwiched between falling income and high medical expenditure.

However, the list announcing rate cuts featured 17 items but did not mention Covid vaccines.

Till September

All the reduced rates would be in force till September 30.

The GST rates on medicines have been brought down to 5% and zero from the earlier slabs of 12% and 5%. Medicines such as Tocilizumab Amphotericin B that earlier attracted 5% GST would now have zero tax while anti-coagulants such as Heparin and Remdisivir that used to be taxed at 12% would be charged at 5%.

Any other drug recommended by the ministry of health and family welfare would attract 5% irrespective of their earlier rates, said a statement issued by the ministry of finance.

The decision was approved at a meeting of the GST Council that was chaired by Union finance minister Nirmala Sitharaman in a virtual meeting on June 12.

Itemwise

Devices such as ventilators, ventilator masks, BiPaP machine, high flow nasal canula, oxygen concentrator and medical grade oxygen would be levied 5% GST instead of 12% earlier.

All other consumables such as pulse oxymeters (12% GST), hand sanitizer, equipment for checking temperature (both 18%), Covid testing kits and other specified diagnostic skits such as D-Dimer, IL-6 (all 12%) would be charged at 5%.

Ambulances that were charged 28% GST would now attract 12%.

Crematorium

Even GST on gas, electric furnaces for crematorium has been slashed from 18% to 5%, though it was not immediately clear how it would immediately impact the end user.

“The GoM’s recommendations have been accepted. They had suggested that these cuts be applicable till August 31. After discussions, it has been decided that these rates will be applicable till September,” said Nirmala Sitharaman.

Push for zero tax

The group of ministers (GoM) was formed after a meeting of the GST Council failed to arrive at a consensus on how to bring down the price of these items.

On June 4, Bengal finance minister Amit Mitra shot off a letter to Union finance minister Nirmala Sitharaman wondering why the GoM did not include anyone who advocated waiver of GST in these items.

Though no opposition party has issued any response to the reductions till this report was filed, a few states had pushed for zero taxes on all Covid essentials.

The decision on revision of GST was taken by a group of eight minister that she had formed after the 44th GST Council meeting on May 28 failed to arrive at a consensus.

Letter from Amit Mitra

In a letter to Sitharaman, Bengal finance minister Amit Mitra had written on June 4, “I was surprised that the GoM of eight ministers did not include some of those who had cogently argued against the proposals of putting GST on Covid related materials. Now I can only hope that the GoM will demonstrate rationality and boldness at the face of a massive pandemic,” Mitra wrote.

The members of the group are Meghalaya chief minister Conrad K Sangma, Gujarat deputy chief minister Nitinbhai Patel, Maharashtra deputy chief minister Ajit Pawar, Goa transport minister Mauvin Godinho, Kerala finance minister K N Balagopal, Odisha finance minister Niranjan Pujari, Telangana finance minister T Harish Rao and UP finance minister Suresh Kr Khanna.

A few states such as West Bengal, Punjab and Delhi had advocated waiver of GST on Covid essentials.

Finmin’s earlier position

In the second week of February Union finance minister Nirmala Sitharaman had twitted that full exemption from GST might increase the price of different items.

“If full exemption from GST is given, vaccine manufacturers would not be able to offset their input taxes and would pass them on to the end consumer/citizen by increasing the price,” Sitharaman wrote on Twitter.

Her response came in reply to a letter Bengal chief minister Mamata Banerjee wrote to Prime Minister Narendra Modi for GST exemption on Covid essentials including vaccines.