GoM: Minimize GST Rate on Covid Drugs & Continue 5% Rate on Vaccines

The Group of Ministers (GOM) led by Meghalaya chief minister Conrad Sangma submitted to the council on Monday the recommendation that 

• No change in the 5% GST rate for Covid vaccines 
• Reduce GST to 5% on both commercial imports and domestic supply of most other Covid medicines and materials.
•  Furthering the recommendations, the GOM also made a suggestion to the council to exempt the GST on the black fungus medicine Amphotericin B for the forthcoming three months.

Earlier, the GST Council’s GST council is a governing body to regulate and direct each and every step for the implementation of goods and service tax in the nation with decisions over tax rates. Read also fitment committee had recommended keeping a GST of 5% on both commercial import and the domestic supply for vaccines.

• Presently,  a GST of 12% on oxygen concentrators, pulse oximeters, medical-grade oxygen, and Covid testing kit is imposed.
• Moving to Ventilators and a large number of medicines for Covid that include Remdesivir, Ivermectin, Doxycycline, Tocilizumab, and Faviflu, they attract GST.rate of 12%.
• GST of 18% is imposed on RT-PCR machines, digital thermometers, laboratory sanitizers/disinfectants, protective garments, road transport tanks, and paper bed sheets.
• And GST of  5% is imposed 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 the taxable value that includes import duties, the effective burden exceeds by another 2-3%,” Punjab finance minister Manpreet Singh Badal had written a letter to Union finance minister Nirmala Sitharaman.

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

What Actually Triggered the Above Mentioned Series of Events?

The opposition-ruled states are persistently making a demand to make vaccines and other Covid materials zero-rated. Consequently,  the Council on May 28 had set up the GoM of state finance ministers to make recommendations to it regarding the taxation of Covid-related items, including vaccines.

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