GST Council Meeting Highlights: GST Cut For Medicines, Oxygen, Tests. Vaccines Remain At 5%
The GST Council slashed the tax rates on medical grade oxygen, Covid testing kits, and other items used in Covid-19 relief and management, but left the rate on vaccines unchanged at 5%.
The Council cut the tax rate on ambulances to 12% from 28% currently, while tax on medical grade oxygen, oxygen concentrators, and ventilators, has been cut to 5% from 12%, said Finance Minister Nirmala Sitharaman.
The lower rates will be applicable till Sept. 30 and any decision to extend the relief will be taken by the GST Implementation Committee after gathering opinions, Sitharaman said after the Council's 44th meeting.
The Council exempted drugs such as Tocilizumab and Amphotericin B used to treat mucormycosis -- commonly called black fungus -- from GST. The rate on Remdesivir has been lowered to 5% from 12% currently.
The panel largely agreed to go with the recommendations of the group of ministers, Sitharaman said. A group of ministers, headed by Meghalaya Deputy Chief Minister Conrad Sangma, had been formed after the Council's last meeting to examine whether any GST concessions or exemptions should be given on Covid-relief items.
Here's the full list of items on which rates have been cut:
'GST On Vaccines Will Remain 5%'
GST on Covid-19 vaccines will remain unchanged at 5%, said Sitharaman.
The central government is paying for 75% of the vaccines, and all citizens can avail those free vaccines, the finance minister said. However, GST will have to be paid by those who go to private hospitals for vaccination.
FMs From Congress-Ruled States Stage Walkout
The demand of some opposition states for zero-rate on Covid-relief items was not taken into account by the central government, according to finance ministers of Punjab and Chhattisgarh.
Congress finance ministers walked out before the meeting concluded to express their disapproval of the Council's decision on Covid relief items, Badal told BloombergQuint. The exclusion of the main opposition party from the Group of Ministers constituted to look into GST concessions for Covid-relief items was another bone of contention, said Badal.
Other issues raised by the opposition-governed states, including compensation period extension, and raising of borrowing limits, were not taken up by the council, Chhattisgarh Finance Minister TS Deo told BloombergQuint.
The GST Council's decision to not cut GST rate on vaccines is a positive one considering that it will not disturb the principal of fungibility of credit under GST and thereby not lead to cost increase arising from loss of credits. Steps such as zero rating with credits or full abatement with credit, etc. could have also lead to an aberration under the GST laws.Ritesh Kanodia, Partner, Dhruva Advisors
GST rate cut on Covid-related items is a step in the right direction. It is likely that the situation will be reviewed around September and if required, the rate cut will be extended for a further period. The sharing of revenue from GST on Covid vaccine by Centre with States is also a good move and will help the States financially.Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co.