GST Cut For Covid-19 Test Kits, Drugs; No Waiver For Vaccines As Vaccination is Free In Govt Sector

GST cut for Covid-19 test kits, drugs; no waiver for vaccines as vaccination is free in govt sector

On Saturday, the Goods and Service Tax council had decided to eliminate the GST rates added on the Covid Drugs, the testing kids, the ambulances and the medical equipment to be accessible to all the people in the midst of the second wave and the pandemic. However, the taxes on the vaccines are unchanged at the lowest slab of 5%. These new rates would be available only till September 30. GST cut for Covid-19 test kits, drugs; no waiver for vaccines as vaccination is free in govt sector

Some of the state ministers, including West Bengal’s Amit Mitra and Punjab’s Manpreet Singh Badal, had initiated the idea for a temporary wavering of the taxes for all the Covid drugs, vaccines and equipment. A group of ministers that are led by the Meghalaya Chief Minister Conrad Sangma recommended that the slashing of the GST rates had been done for items other than the vaccines. 

The Union Government had been constantly out of the view that the tax concessions in the vaccines are redundant because all these are mostly made accessible for free to the people via the government channels, whereas there are no guarantees issued that the private sector would pass on the tax reliefs to the intended beneficiaries. 

The council had allowed exemptions on the immunosuppressant Tocilizumab and mucormycosis (black fungus) drug Amphotericin B from GST. “There was a lot of substance in the recommendations made by the GOM…the Council naturally agreed to go with GOM recommendations subject, of course to slight tweaking,” said the finance minister Nirmala Sitharaman.

Even though the GoM had recommended the retaining of GST rates for the ambulances at 28% and that for temperature check equipment at 18%, the Council brought it down to 12% and 5%, respectively. The council also reduced the GST rate to 5% from 18% for electric furnaces in the crematoriums, while the GoM’s recommendation was to cut it to 12%. The GST’s rate fitment panel had also given suggestions that there is no change in the tax on the vaccines whilst suggesting a cut in the rates for some of the drugs and equipment. 

The Punjab Finance Minister Manpreet Singh Badal had tweeted that “Attempt to pick and choose exemptions on the grounds of inverted duty structure or cheaper imports would destroy the foundation of #GST. GST on #COVID-19 preventive materials, masks, PPEs, hand sanitisers, medical-grade oxygen, testing kits, ventilators, BiPAP machine and pulse oximeters are insensitive.”

“It’s not an issue with the people (taxation of vaccines) as they are not paying any tax… it’s free for them,” Tarun Bajaj, the revenue secretary, said. 

As of Monday, Prime Minister Narendra Modi had announced that the Union Government would buy 75% of the jabs from the vaccine manufacturers, including 25% of the state quota, and give it for free to the state governments for vaccination.


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