The GST Council, which met after October last year, decided to set up a Group of State Finance Ministers to look into the crucial question of granting tax relief to Covidmaterials, including vaccine and drugs.
“The Group of FMs will formed by tomorrow (Saturday). It will submit its recommendation on or before June 8 and then the Council will take a decision,” Finance Minister Nirmala Sitharaman told reporters after the Council meeting that lasted for nearly nine hours. She said there divergent views emerged at the meeting.
Relief on compliance issues
The Council decided to relax compliance requirements for small taxpayers beside approving an amnesty scheme for non-filers. However, it deferred a proposal on correcting the inverted duty structure on footwear and textiles as the ‘time is not appropriate’ for that on account of the pandemic.
The meeting saw heated discussion on the issue of the rate for Covid-related materials. Talking to BusinessLine , Kerala Finance Minister KN Balagopal said the Opposition-ruled States made their points forcefully. Deputy Chief Minister of Delhi Manish Sisodia said that he raised the issue of making Covid vaccines, oxygen cylinder, concentrator, oximeter, PPE kit, sanitisers, mask and testing kits tax free. A similar proposal was put up by Ministers of Kerala, West Bengal and Punjab. However, the Finance Ministers of BJP ruled States held a divergent view and strongly opposed this proposal, Balagopal said.
Punjab Finance Minister Manpreet Singh Badal tweeted: “GST #COVID19 relief put on hold for lack of compassion by the Union Government”.
![BL29pg1GSTcompliancesjpg BL29pg1GSTcompliancesjpg](/theme/images/bl-online/1x1_spacer.png)
Compensation shortfall
The Council approved a proposal for the Centre to borrow ₹1.58-lakh crore to meet compensation shortfall and give it to States. The same mechanism was adopted last year for borrowing ₹1.1-lakh crore to meet the compensation shortfall. Revenue Secretary Tarun Bajaj said the Finance Ministry and the RBI will discuss the borrowing. He also said that some part of this year’s borrowing will go to meet the compensation shortfall of FY21.
Ad hoc exemption from IGST
(Integrated Goods and Services Tax).
The Council decided to extend the ad hoc exemption from IGST on Covid relief materials to August 31 from June 30. These goods include medical oxygen, oxygen concentrators and other oxygen storage and transportation equipment, certain diagnostic markers, test-kits, and vaccines.
It was also decided that if these goods are imported on a payment basis by an agency, for donating to the government or on the recommendation of a state authority for any relief agency, such agency will also get the exemption. Earlier this exemption was applicable only when these goods were imported ‘free of cost’ for free distribution. It may be mentioned that these goods are already exempt from the Basic Customs duty. Under the ad hoc exemption from IGST, corpotates, NGOs or any other entity will be included for any relief materials imported for free distribution, subject to certification.
Further in view of rising Black Fungus cases, the IGST exemption has been extended to drug Amphotericin B.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.