The Goods and Service Tax Council on Saturday decided to reduce GST rates for Covid drugs, test kits, medical equipment, and even ambulances to provide relief for people during the pandemic, but kept the vaccine tax unchanged as low as 5. %. The new rates will be in effect until September 30th.
While some state finance ministers, including Amit Mitra of West Bengal and Manpreet Singh Badal of Punjab, have proposed a temporary tax exemption for all Covid drugs, vaccines, and equipment, a group of ministers led by the Prime Minister of Meghalaya Conrad Sangma recommended cutting GST tariffs for items other than vaccines.
The EU government has found tax breaks for vaccines unnecessary, as vaccines are mostly made available to people free of charge through government channels, while there is no guarantee that the private sector will pass tax relief on to intended beneficiaries.
The council, however, exempted the immunosuppressant Tocilizumab and the mucomycosis drug (black fungus) Amphotericin B from GST. "There was a lot of substance in the recommendations made by the GOM the Council naturally agreed to follow the recommendations of the GOM, obviously subject to minor changes," said Finance Minister Nirmala Sitharaman.
Although the government of the Republic recommended keeping the GST tariffs for ambulances at 28% and those for temperature control equipment at 18%, the Council lowered it to 12% and 5% respectively. The council also reduced the GST rate to 5% from 18% for electric ovens in crematoria, while the GoM's recommendation was to reduce it to 12%. The GST Rate Adaptation Panel also suggested not changing the vaccine tax, while suggesting cutting rates for some drugs and equipment.
Punjab Finance Minister Manpreet Singh Badal tweeted: “Attempting to choose exemptions based on the structure of reversed tariffs or cheaper imports would destroy the foundation of GST. GST on # COVID-19 preventative materials, masks, PPE, hand sanitizers, medical-grade oxygen, test kits, ventilators, bipap machine, and pulse oximeters is numb.
"It's not a problem with the people (vaccine taxation) as they don't pay any tax ... it's free for them," said Revenue Secretary Tarun Bajaj.
On Monday, Prime Minister Narendra Modi announced that the Union government will buy 75% of vaccines from vaccine manufacturers, including 25% of the state share, and give it free to state governments for vaccination.