GST: Haryana Announces Refund On Donation Of Oxygen Tanks, Vaccine
Donation of Covid-19 relief material, including oxygen concentrators, vaccines and remdesivir injections, will get a GST reimbursement in Haryana till June 30, the state government has said. With this, Haryana becomes the first state to permit such a reimbursement.
The scheme is aimed at facilitating donation of Covid-19 relief materials by private parties in light of acute shortage of health equipment in the state.
Currently, donations are exempt from payment of goods and services tax. Consequently, no input tax credit is allowed against GST paid on donation materials. This means tax paid at the time of purchase cannot be used to offset the outgoing GST liability. This tax then becomes an additional cost for the businesses. The scheme addresses this anomaly.
Ranjeet Mahtani, partner at Dhruva Advisors, welcomed the scheme.
The scheme takes away the potential loss of input tax credit by reimbursing it. This will certainly give impetus to businesses willing to donate and eliminate concerns of loss of credit.Ranjeet Mahtani, Partner, Dhruva Advisors
The scheme is applicable to certain notified items donated free of cost by corporates, NGOs and individuals to the Haryana government, and hospitals, institutions run by it. For such donations, GST—including CGST, SGST or IGST—already paid on purchase of specified items will be reimbursed.
The reimbursement can be claimed on the basis of a certificate issued by the Health and Family Welfare Department. This certificate has to be then provided to the state Excise Department which, post verification, will sanction the reimbursement.
Mahtani said an explanation may also be given by the government that input tax credit available will stand reduced to the extent of reimbursement granted. This will ensure there are no double benefits being claimed and also future litigation on this point is avoided.
Earlier this month, the central government had also granted IGST exemption on imports of Covid-19 relief material being donated from abroad till June 30, subject to certain conditions.