In the 43rd GST Council meeting held on 28 May 2021, the Council had decided to constitute a Group of Ministers (GoM) to delve into the need to provide further tax relief by reducing GST rates on essential items used for COVID-19 relief. The GoM headed by Meghalaya Chief Minister Conrad Sangma had submitted their report on 7 June 2021 to the GST Council. The recommendations fell more or less in line with the earlier suggestions of the fitment committee to the GST council.
Based on the report submitted by the GoM, the 44th GST Council meeting has recommended reducing the GST rates on specified items being used in COVID-19 relief and management till 30 September 2021.
Category I: Medicines
|
Sr. No. |
Description |
Present GST Rate |
Proposed GST Rate |
|
1 |
Tocilizumab |
5% |
Nil |
|
2 |
Amphotericin B |
5% |
Nil |
|
3 |
Anti-Coagulants like Heparin |
12% |
5% |
|
4 |
Remdesivir |
12% |
5% |
|
5 |
Any other drug recommended by the Ministry of Health and Family Welfare (MoHFW) and Department of Pharma (DoP) for COVID-19 treatment |
Applicable Rate |
5% |
Category II: Oxygen, Oxygen generation equipment and related medical devices
|
Sr. No. |
Description |
Present GST Rate |
Proposed GST Rate |
|
1 |
Medical Grade Oxygen |
12% |
5% |
|
2 |
Oxygen Concentrator/Generator, including personal imports thereof |
12% |
5% |
|
3 |
Ventilators |
12% |
5% |
|
4 |
Ventilator masks /canula/helmet |
12% |
5% |
|
5 |
BiPAP Machine |
12% |
5% |
|
6 |
High flow nasal canula (HFNC) device |
12% |
5% |
Category III : Testing kits and machines
|
Sr. No. |
Description |
Present GST Rate |
Proposed GST Rate |
|
1 |
COVID-19 Testing Kits |
12% |
5% |
|
2 |
Specified Inflammatory Diagnostic Kits, namely DDimer,IL-6, Ferritin and LDH |
12% |
5% |
Category IV : Other COVID-19 related relief material
|
Sr. No. |
Description |
Present GST Rate |
Proposed GST Rate |
|
1 |
Pulse Oximeters, including personal imports thereof |
12% |
5% |
|
2 |
Hand Sanitizer |
18% |
5% |
|
3 |
Temperature check equipment |
18% |
5% |
|
4 |
Gas/Electric/other furnaces for crematorium, including their installation, etc. |
18% |
5% |
|
1 |
Ambulances |
28% |
12% |
Our Comments
Earlier it was suggested that the Union Finance Ministry was not in favor of granting complete GST exemptions on essential medical goods as it could lead to additional tax costs in the supply chain due to blockage/reversal of input tax credit. In line with this, the GST Council has exempted only a few of the essential drugs from GST. In most cases, the GST Council has adopted an approach of reducing GST rates rather than a complete exemption to avoid blockage of GST credit.
It is expected that these rate reductions on key medical items such as Amphotericin B, Remdesivir, Medical grade oxygen, etc., will boost the nations' fight against COVID-19 by making these items available at affordable prices.
The Council could have also explored the possibility of granting a refund to the final supplier in the supply chain discharging GST but not collecting from the buyer. This may not be a simple possibility under the present framework of the GST law. Hence, a refund may have to be granted outside of GST law subject to non-collection of tax from ultimate customers. This could have helped avoid any disruptions in credit flow and also ensure that passing of GST cost on end consumers is viably avoided.
Furthermore, now that vaccination drives organized by various public/private sector organizations to their employees are thriving, clarity on levy of GST on doses administered to employees/their dependants, ITC claim, GST applicability for arranging the administering of vaccines, etc. would have been highly appreciated by the industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
