New Delhi| Amid demands for lower duty on essential items and medicines for the treatment of COVID-19, the GST Council on Saturday decided to reduce the rates of several COVID-relief items to five percent from the existing 12 to 18 percent. However, the council has retained the tax rate on the vaccine at five percent.
Addressing the media after the GST Council meeting, Finance Minister Nirmala Sitharaman said that the Council has agreed to go along with the recommendations of the Group of Ministers (GoM), which remained a single point agenda in the Council on Saturday.
He said the tax rate on various COVID relief medical items has been reduced, while there has been no change in the 5 percent GST rate on vaccines. Sitharaman clarified that even if there is no change in the rates of the vaccine, there will be no impact on the common people, as the vaccination is being provided free of cost.
Addressing the media after the meeting, Finance Minister Sitharaman said that the central government is procuring 75 percent of the vaccine and is also paying GST on it. The 75 percent vaccine that is being provided free of cost to the people in government hospitals will not have any effect on the public.
As part of COVID relief measures, the GST rate on Remdesivir injection has been reduced from 12 percent to 5 percent and Medical Grade Oxygen at 5 percent in the 44th meeting of the GST Council.
The council has also reduced the rates of medicines used for black fungus to zero levels. That is, there will be no tax on medicines used for the disease of black fungus.
The special fee cut will be applicable till September 30, 2021.
Sitharaman said that although the GoM had recommended a rate cut till August, the council has decided to keep it till the end of September. After this, it will be decided whether the reduction in the rates of those essential items needs to be extended or not.
He said that there will be a 5 percent GST on corona vaccines. According to the announcement, the Center will buy 75 percent of the vaccine and pay its GST, but 70 percent of the GST revenue will be shared with the states.
In another major move, the GST rate on ambulances has been reduced to 12 percent from the previous 28 percent.
Similarly, there will be no tax on drugs like Tocilizumab and Amphotericin B. The Minister said that the GST rates have been fixed on specified items being used in Corona relief and management till 30 September 2021.
The tax rate on tocilizumab used to treat COVID-19 has also been waived. The previous tax rate on this was 5 percent.
In addition, the council headed by the Finance Minister also decided that the tax rate on any other drug recommended by the Ministry of Health and Family Welfare and the Department of Pharma (DOP) for the treatment of COVID will be kept at 5 percent.
In the case of life-saving equipment and products, the low availability of which has created a lot of panic across the country, the reduction in the tax rate will certainly bring some relief.
During the Corona crisis, 18 percent GST was being imposed on many things, which has been reduced to 5 percent. There are many other items on which 12 percent or 18 percent GST was levied, that have also been reduced to 5 percent. Several suggestions were made by the Group of Ministers, which have been seriously considered by the GST Council.
The Finance Minister said that the rate of GST on ambulances has been reduced from 28 to 12 percent. He said that the GST Council has decided to reduce the tax rate on medical grade oxygen, BIPAP machines, oxygen concentrators, ventilators, pulse oximeters from 12 to five percent.
The low availability of medical-grade oxygen in hospitals during the initial period of the second wave of COVID-19 took many lives. There was a shortage of ventilators in the first wave, which was a serious concern in the country.
Now the tax rate on hand sanitizers, temperature-testing devices has also been reduced to five percent.
Now, Covid test kits will also attract a tax of 5 percent, as against the earlier rate of 12 percent.
Commenting on the decisions, Deloitte India Senior Director M.S. Mani said, although cuts on drugs and equipment are good welfare measures, reducing the grace period will make it difficult for businesses to plan fresh investments and expand their supply chains.
He expressed concern about ensuring access to essential equipment to all corners of the country as the grace period gets shorter.
“Businesses engaged in their manufacturing and trading expect this period to be extended beyond September 30,” Mani said.
