Finance Minister Nirmala Sitharaman on Friday rejected a joint demand by the finance ministers of eight Opposition-ruled states for a zero GST rate on Covid essentials, including medicines and equipment.
The plea for a zero-tax rate on Covid essentials was made jointly by the finance ministers of Punjab, Rajasthan, Chhattisgarh, Maharashtra, Tamil Nadu, Jharkhand, Kerala and West Bengal.
She, however, agreed to call another meeting of the GST council in a few days to specifically discuss the GST rate cuts on Covid-related materials.
Sources said she cited a report prepared by the Fitment Committee on GST rates, comprising tax officers of the Centre and states, listing out the pros and cons of waiver and zero-rating of Covid vaccines, drugs and other equipment, pointing out that it would result in denial of benefit of the input tax credit on raw materials to the manufacturers; therefore, not much benefit will accrue to the consumers.
Earlier in the day, Congress general secretary Priyanka Gandhi Vadra urged Sitharaman and the state finance ministers to exempt GST on all life-saving medicines and equipment being used in the fight against Covid-19, as taxing them was a "cruelty."
Recovering GST on COVID-related products from people who struggled for ambulances, beds, ventilators, oxygen, medicines and vaccines during the pandemic amounts to "cruelty and insensitivity", Priyanka said in a tweet in Hindi.
However, the FM refused to budge from the levy of 5% GST. Sitharaman, who presided over the meeting, however, told a press conference that no taxes will be imposed on relief material received from abroad for the fight against Coronavirus. Also, in a marginal relief, the council extended the GST exemption on import of Covid-related equipment till August 31. The council has also included medicines used in treatment of black fungus in the list of items exempted.
The FM said no consensus could be reached on reduction of tax rates on Covid vaccines. The council, therefore, constituted a group of ministers (GoM) to take a decision on it by June 8. The GoM may also consider revision of GST on a score of items used in the fight against Coronavirus. The filing of quarterly returns by small traders will continue, while the council relaxed the late fee penalty on delayed payment of GST.
