The Finance Ministry on Saturday announced formation of an eight-member Group of Ministers to go into the need for concession/exemptions from GST for Covid-19 related individual items.

The committee will have Chief Minister of Meghalaya, Conrad Sangma, as the Convenor, while Deputy Chief Minister of Gujarat Nitin Patel; Deputy Chief Minister of Maharashtra Ajit Pawar; Transport Minister of Goa Maubin Godinho; Finance Minister of Kerala KN Balagopal; Finance Minister of Odisha Niranjan Pujari; Finance Minister of Telangana T Harish Rao; and Finance Ministry of Uttar Pradesh Suresh K Khanna, will be the members.

The GoM will submit its recommendation to the GST Council by June 8. As there were divergent views on duty revision for Covid relief materials, including vaccine, at the GST Council meeting held on Friday, it was decided to form a GoM. Once the group gives its recommendations, a meeting of the Council will be convened to take a final decision.

Items to be considered

According to an office memorandum, the GoM will “examine the need for GST concessions/exemptions and make recommendations on vaccines, drugs and medicines for Covid treatment and testing kits for detections, besides medical grade oxygen, pulse oximeters, hand sanitizers, oxygen therapy equipment such as concentrators, generators and ventilators, PPE kits, N-95 masks, surgical masks, temperature checking machines, etc.” The group can consider any other items for Covid relief.

The Opposition-ruled States are pitching for full exemption or ‘zero rating’ for Covid relief materials, while the Centre is not in favour of it. Even prior to the Council meeting, the Fitment Committee (a panel of the Council which prepares proposals for rate revision) suggested no change in rate on Covid vaccines. It, however, recommended lowering duty for a limited period on oxygen concentrators and pulse oximeters, but no change on items such as PPE kits and N-95 masks.

One of the arguments for no change in rate on vaccine is that almost the entire procurement of vaccine is done by the Centre and States and is provided free of cost to the beneficiary. This means taxes paid would ultimately accrue to Centre and States themselves. Another argument is that if vaccines are exempted, this would result in no Input Tax Credit to domestic manufacturers.

Opposition States differ

However, Opposition-ruled States differ. Earlier this week, in a letter to Finance Minister Nirmala Sitharaman, West Bengal Finance Minister Amit Mitra called for some extreme measures to bring relief to the people and suggested zero rated tax for all Covid relief materials, equipment, drugs and vaccines. “This will allow the manufacturers and their entire supply chain entrepreneurs to avail themselves of input tax credit. Therefore, there would be no adverse impact on prices for the consumers,” he said.

Punjab Finance Minister Manpreet Singh Badal highlighted tax rates, including Customs duty on various Covid relief materials. He said many goods incur Basic Customs Duty ranging up to 20 per cent and GST up to 18 per cent, besides a social welfare surcharge of 10 per cent. As IGST is charged on taxable value that includes import duty, all that jacks up cost by 2-3 per cent, he claimed.

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