Crucial meeting on Saturday to decide on GST on Covid essentials

FM Nirmala Sitharaman has formed a panel of eight ministers from different states who have studied the recommendations on the contentious matter

  • Money9
  • Publish Date - June 11, 2021 / 07:06 PM IST
Crucial meeting on Saturday to decide on GST on Covid essentials

The entire country is looking forward to the GST Council meeting on June 12 that is supposed to come up with a GST structure on Covid essentials such as vaccines, medicines, consumables such as sanitisers and devices needed for the treatment of the infection.

The group of ministers (GoM) was formed after a meeting of the GST Council failed to arrive at a consensus on how to bring down the price of these items.

On June 4, Bengal finance minister Amit Mitra shot off a letter to Union finance minister Nirmala Sitharaman wondering why the GoM did not include anyone who advocated waiver of GST in these items.

Amit Mitra’s letter

“I was surprised that the GoM of eight ministers did not include some of those who had cogently argued against the proposals of putting GST on Covid related materials. Now I can only hope that the GoM will demonstrate rationality and boldness at the face of a massive pandemic,” Mitra wrote.

The members of the group are Meghalaya chief minister Conrad K Sangma, Gujarat deputy chief minister Nitinbhai Patel, Maharashtra deputy chief minister Ajit Pawar, Goa transport minister Mauvin Godinho, Kerala finance minister K N Balagopal, Odisha finance minister Niranjan Pujari, Telangana finance minister T Harish Rao and UP finance minister Suresh Kr Khanna.

A few states such as West Bengal, Punjab and Delhi had advocated waiver of GST on Covid essentials.

Taxes now

Now vaccines attract a rate of 5% while cotton masks of woven fabrics are taxed at the same rate.

However, alcohol-based sanitisers, handwash, and gloves that are deemed as essentials for hygiene now are all taxed at 18%.

Face shields and PPEs and infrared thermometers attract taxes of 18%, while medical oxygen and ventilators and other therapeutic respiration devices are taxed at 12%.

Several states such as Delhi, Punjab, West Bengal, Chhattisgarh had pushed for GST rate cuts on essential Covid items, devices, and consumables.

The Centre has already exempted integrated GST on imported stuff such as ventilators, oxygen concentrators, and life-saving medicines that have been obtained as relief material from donations and is meant for free distribution.

FinMin’s position

In the second week of February Union finance minister Nirmala Sitharaman had tweeted that full exemption from GST might increase the price of different items.

“If full exemption from GST is given, vaccine manufacturers would not be able to offset their input taxes and would pass them on to the end consumer/citizen by increasing the price,” Sitharaman wrote on Tweeter.

Her response came in reply to a letter Bengal chief minister Mamata Banerjee wrote to Prime Minister Narendra Modi for GST exemption on Covid essentials including vaccines.

Pros and cons

An expert on GST, Rajya Sabha MP, Sushil Modi told the media that a few options such as lowering the rate of tax, conditional exemption, zero-rating might be considered. But the pros and cons of all of the options need to be carefully considered so that “the move actually leads to the lowering of cost for the end-user.”

Former West Bengal finance minister Asim Dasgupta who had substantially framed the migration to GST told Money9 that a low rate of 2% on all Covid essentials would help reduce the price of these items yet partially meet the revenue demands of the government.

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