GST Council cuts tax rate on COVID-19 essentials

 







The Goods and Services Tax (GST) has been waived for two critical drugs against COVID-19 and black fungus, Tocilizumab and Amphotericin B, while tax rates have been reduced to 5% on 14 major pandemic relief goods, including testing kits and hand sanitisers, from prevailing rates in the range of 12% and 18%.

Ambulances, which are currently taxed at 28%, will now attract a GST levy of 12%, Finance Minister Nirmala Sitharaman said on Saturday, announcing these concessional rates following a meeting of the GST Council to discuss the indirect taxes levied on COVID-19 supplies.

The reduced rates, which Revenue Secretary Tarun Bajaj said were aimed at providing some succour to the people amid the pandemic, will remain effective till September 30, but could be extended further based on later assessments.

The 5% GST levied on vaccines was left unchanged, following the recent changes in the country’s vaccine procurement strategy that puts the Union government in charge of augmenting supplies.

“When it was discussed, it was mentioned that the Centre is buying 75% of the vaccines and will remit the GST on it and the revenue on that will be shared 70% with the States,” Mr Bajaj said, explaining that this will have no implications for people as they will receive the vaccine for free.


“This particular GST Council meeting is a single agenda meeting to discuss the recommendations of a group of ministers (GoM) set up at our last meeting (on May 28) ,” Ms Sitharaman said, stressing that no other subjects such as compensation to States were discussed.

The recommendations of the GoM, led by Meghalaya chief minister Conrad Sangma, were accepted by the Council, except for three items, where its proposed rates were reduced further, she said.

This includes electric furnaces used in crematoriums, where the GoM had suggested as 12% GST rate, but the Council has reduced it to 5%. Similarly, for temperature checking equipment, the GoM had recommended an 18% GST which has been slashed to 5%.

On ambulances, the GoM had recommended a 28% rate. “However, after discussions, because of the crisis and as this is an enduring asset for hospitals, we thought even ambulances should be brought down. So the rate on ambulances has been brought down to 12%,” Ms Sitharaman said.

Drugs & Devices covered

The GST rate on Remdesivir and anti-coagulants like Heparin has been reduced from 12% to 5%, with the Council recommending that the same rate be levied on any other drug that may be recommended by the Health and Family Welfare Ministry and the Department of Pharma for COVID-19 treatment.

For oxygen concentrators, medical grade oxygen and related devices such as ventilators, BiPAP machines, the GST rate has also been brought down to 5% from 12%. The same reduction has been approved in the levies on COVID-testing kits and pulse oximeters.

The 5% GST will apply to personal imports of oxygen concentrators as well as pulse oximeters. The 18% GST payable on hand sanitisers has been reduced to 5% as well. Revenue Secretary Mr Bajaj said that the rate changes will be notified over Sunday and Monday.

Experts said the new rates will provide some relief to people by reducing medical treatment costs, but the limited period till September for which the lower rates have been proposed, is problematic.

"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 September," said MS Mani, senior director, Deloitte India.

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 ...
Read more

Income Tax Dept detects ₹350 cr unaccounted cash receipts after raid in Rajkot

Image
  The Income Tax Department carried out a search and seizure operation on a real estate group based in Gujarat's Rajkot and found unaccounted cash receipts in various projects of approximately ₹350 crore, the Finance Ministry said on Friday. The group is among Gujarat’s prominent real estate builders and developers and is actively engaged in real estate, construction and land trading businesses in and around Rajkot. More than 40 premises were covered in the search operation. During the course of operation, many incriminating documents and digital evidences were seized indicating involvement of the group in unaccounted transactions. The IT sleuths found substantial evidence of transactions outside the regular books of accounts, unaccounted cash expenses, cash advances received and interest paid in cash. Evidence of on-money payments in real estate projects-flats, shops and land deals has also been found. Total unaccounted cash receipts in various projects of approximately ₹350 crore...
Read more