The GST Council, which met on Saturday, has decided to retain the tax rate of 5 per cent on Covid vaccine, while lowering rates on medicines and other relief materials including ambulance till September 30.
The decision is based on recommendations of Group of Ministers State Finance Ministers, headed by Meghalaya Deputy Chief Minister Conrad Sangma, constituted by the Council.
Briefing media persons after the Council meeting which lasted for half a day, Finance Minister Nirmala Sitharaman said: “It was felt that the GoM’s recommendations has brought in a lot of substantial change. Many items that were at 18 per cent and 12 per cent, were brought down to 5 per cent. The Council largely agreed to go with GoM’s recommendation.”
In the previous meeting of the Council on May 28, there was no agreement on the GST rates on various individual Covid relief materials. This led to the formation of a GoM which submitted its recommendations on June 6. The GoM did not recommend any change in the GST rate on vaccines. However, it suggested reduction on various medicines along with other products including medical -grade oxygen, oxygen concentrators, pulse oximeters, hand sanitisers and temperature check equipment. Barring changes on some items, the Council went by these recommendations.
Talking about retaining 5 per cent rate on vaccine, the FM said, “Central Government is purchasing 75 per cent and is paying GST also. But, the impact of this GST on people will be NIL since people would be getting vaccines free of cost at government hospitals.”
Last week, Prime Minister Narendra Modi announced changes in vaccine policy. Accordingly, Centre itself will buy 75 per cent of the total vaccine production from vaccine manufacturers and give it to the state governments free of cost. “The GST will also be borne by the Centre. But out of the income from GST, 70 per cent will be shared with the States,” Revenue Secretary Tarun Bajaj said while adding that the notification of lower GST rates would be issued either on Sunday or Monday.
Opposition sees red
Meanwhile, the Opposition-ruled States are not happy with the outcome of the meeting. Punjab Finance Minister Manpreet Singh Badal said the GST’s GoMs should stop acting like a shahenshah of yesteryears and instead let compassion speak through its decisions.
“All Covid-related goods must be zero-rated during the pandemic. The finance ministers of the Congress-ruled States vehemently opposed the imposition of GST on Covid-related items at this time of a national crisis, and have recorded our note of dissent. The other alternative is to charge 0.1 per cent, which is well within the powers of the GST Council, and this measure should be in place till the pandemic is over,” Badal said.
Experts’ take
Meanwhile, pharma companies and tax experts feel that latest move is need of hour. Mahesh H Doshi, National President of Indian Drug Manufacturers’ Association, said life-saving drugs will be cheaper. MS Mani, Senior Director at Deloitte India, felt that reduction period should be extended beyond September 30.