Cut GST on Covid drugs and other items, retain rate for vaccines at 5%: GoM


The Council’s fitment committee had earlier recommended retaining a 5% GST on both commercial import and domestic supply of vaccines.

A group of ministers (GOM) led by Meghalaya chief minister Conrad Sangma is learnt to have recommended no change in the 5% goods and service tax (GST) rate for Covid vaccines while suggesting reduction of the GST rate temporarily to 5% for both commercial imports and domestic supply of most other Covid medicines and materials. It also recommended exemption from GST for the black fungus medicine Amphotericin B for three months.

The GOM, which had time till Tuesday to submit its report, gave it to the Council on Monday itself, a state government official said.

The Council’s fitment committee had earlier recommended retaining a 5% GST on both commercial import and domestic supply of vaccines.

At present, oxygen concentrators, medical grade oxygen, pulse oximeters and Covid testing kits attract 12% GST on commercial imports and domestic supplies. Ventilators and a slew of medicines for Covid ,including Remdesivir, Doxycycline, Ivermectin, Faviflu and Tocilizumab, attract 12% GST. GST is 18% on RT-PCR machines, protective garments, digital thermometers, laboratory sanitisers/disinfectants, paper bed sheets and road transport tanks. The GST rate is 5% on N95 mask/surgical masks.

“Many goods suffer BCD (basic customs duty) ranging up to 20% and IGST up to 18% besides a social welfare surcharge of 10%. As IGST is charged on taxable value that includes import duties, the effective burden exceeds by another 2-3%,” Punjab finance minister Manpreet Singh Badal had written to Union finance minister Nirmala Sitharaman seeking relief ahead of the last GST Council meeting on May 28.

Supporting Badal’s view, West Bengal finance minister Amit Mitra wrote to Sitharaman recently, batting for zero-rated tax on Covid-related items at least for a fixed period of time or taxing them minimally at 0.1% to avoid any implementational hurdles.

The Union government has already exempted import of oxygen concentrators, ventilators, cylinders, Remdesivir, Tocilizumab and Favipiravir from customs duties. IGST is exempted on imports of specified Covid-19 relief material donated/purchased from abroad by approved agencies, for free distribution for covid relief.

Amid growing demand for opposition-ruled states to make vaccines and other Covid matrials zero-rated, the Council on May 28 had set up the GoM of state finance ministers to make recommendations to it on the taxation of Covid-related items, including vaccines. The Union government is apparently of the view that tax concessions on vaccines are redundant, given that these are made available free of cost to the people via the government channels while there is no guarantee that the private sector will pass on the tax reliefs to the intended beneficiaries.

Besides Sangma, the other members of the GOM are Gujarat deputy CM Nitinbhai Patel, Maharashtra deputy CM Ajit Pawar, Goa transport minister Mauvin Godinho, Kerala finance minister KN Balagopal, Odisha finance minister Niranjan Pujari, Telangana finance minister T Harish Rao and UP finance minister Suresh Kumar Khanna.

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