GST Council may slash rates on oxygen and medical gear








The Goods and Services Tax Council will consider cutting the GST rate from 12% to 5% on medical oxygen and related gear, pulse oximeters and testing kits for a limited period to help lower the cost of treating covid-19, in its virtual meeting on Friday.

The federal indirect tax body, however, is likely to leave untouched the tax rate on vaccines and medicines as these attract only 5%, the merit rate that covers most of the essential goods, said a person aware of discussions between the Union and state governments.

A panel of officials has studied suggestions from state governments and other stakeholders, and proposed that any relief should take the form of a 5% rate rather than an exemption, or special rate or zero rating of the product, which may distort the GST structure.

The panel has proposed that revised tax rate on oxygen concentrators and generators, and pulse oximeters be valid till the end of July and on covid testing kits till the end of August, the person said. The panel did not recommend any change in the tax rate on vaccines because it is already at 5% and the taxes paid on raw materials and services could be adjusted against the tax liability on the vaccine.

Also, given that treatment protocols keep changing, no tax changes are proposed for medicines, most of which are already in the 5% slab. Given the desperation of state governments to reduce costs in the midst of a raging pandemic, these proposals could undergo some changes when the Council discusses them on Friday

The Council is also expected to widen the list of medical supplies for covid relief that are eligible for exemption from import duties and integrated GST when imported into the country for free distribution or donation. However, the tax rate on hand sanitisers, masks, personal protection gear and ambulances will remain unchanged as these are in the 5% slab, with alternatives available.

The Centre last month exempted basic customs duty and agriculture cess on items like medical oxygen, oxygen generators and concentrators, ventilators and cryogenic transport tanks. Waiver of customs duty and IGST for certain diagnostic kits and reagents have also been announced for a limited period. It also reduced IGST on imported oxygen concentrators meant for personal use from 28% to 12% for a limited period.

However, the Delhi high court last week said that imposition of 12% IGST on oxygen concentrators for personal use or those received as gifts was “unconstitutional". Experts said this may weigh on the Council’s deliberations.

One can expect that the Council may further reduce the rate or grant exemption to imports of oxygen concentrators for personal use for a limited period, said Niraj Bagri, partner at Dhruva Advisors LLP, a consultancy

Council may weigh calls of bureaucracy

The GST Council is expected to discuss alleged Kafkaesque bureaucratic decisions to enforce compliance of goods and services tax, which may have serious implications for the industry, during the council’s meeting on Friday.

Punjab finance minister Manpreet Singh Badal has told Union finance minister Nirmala Sitharaman that bureaucratic decisions, ranging from restriction of input tax credits to cancellation of registration, and moving compliance away from the political oversight of the GST Council, set a dangerous precedent by delegating excessive powers to bureaucrats.

Punjab will not incorporate such legal changes in state legislation in unless they are cleared by the council, he said.

“GST is being increasingly perceived to be causing excessive harassment and arbitrariness (freezing of productive assets of businesses, suspension of registrations and denial of eligible tax credits) and moving away from a fair and non-adversarial tax system that forms the foundation for a progressive tax regime," Badal said in his letter to Sitharaman on Monday. Mint has seen a copy of the letter.

Comments

Post a Comment

Popular posts from this blog

Centre appeals against ruling on levy of GST on maintenance charges to resident welfare associations

Image
  The Centre has preferred a writ appeal before the Madras High Court against a single judge's order that flat or villa owners paying more than ₹7,500 a month towards maintenance charges to their residents’ welfare associations must pay Goods and Services Tax (GST) at the rate of 18% only for the amount exceeding ₹7,500 and not for the entire monthly contribution. Justices T.S. Sivagnanam and Sathi Kumar Sukumara Kurup on Wednesday allowed an application filed by the Centre to dispense with production of a certified copy of the judgment passed by Justice Anita Sumanth recently and directed the Registry to list the appeal for admission in the usual course. Justice Sumanth had in July this year quashed an order passed by the Authority for Advance Ruling (AAR) on June 21, 2019 as well as a consequent circular issued by the Department of Revenue under the Union Finance Ministry on July 22, 2019 since both of them had insisted upon collecting GST for entire monthly contribution. The jud
Read more

Seven key things to know before filing income tax return (ITR) for FY21

Image
  The last date to file income tax return for the financial year 2020-21 has been extended to September 30, 2021. Although there is more than two months left for the deadline to end, it is always recommended to complete the task as soon as possible and not to wait for the last minute. Worth mentioning here is that the income tax department last month launched a new e-filing portal (www.incometax.gov.in) to speed up the processing of tax returns. The I-T department will soon launch a mobile application, having all the features of the new portal. This year taxpayers have to take care of the following changes in the ITR filing process. 1) A new utility named JSON has been launched for filing tax return forms for FY21. At present, only three forms, ITR 1, 2 and 4 have been released. These new forms will import pre-fill data such as personal details, salary income, dividend income, interest income, capital gains and all the information available in Form 26AS. 2) Taxpayers will have the opti
Read more

Income Tax Return or ITR for FY20 Can Be Filed Till May 31

Image
  n the wake of severe Covid-19 pandemic, the Central Board of Direct Taxes (CBDT) has decided to extend timelines of various tax compliance dates on Saturday. “In view of the adverse circumstances arising due to the severe Covid-19 pandemic and also in view of the several requests received from taxpayers, tax consultants & other stakeholders from across the country, requesting that various compliance dates may be relaxed, the Government has extended certain timelines today," the ministry of finance said in a statement. The move is aimed at mitigating “the difficulties being faced by various stakeholders," it further added. The “relaxations are the latest among the recent initiatives taken by the government to ease compliances to be made by the taxpayers with the aim to grant respite during these difficult times," it mentioned in a notification. “It’s a welcome move to extend the timeline of various tax compliances as the country is struggling with severe second wave
Read more