No cut in GST on Covid essentials

GST Council sets up panel to decide on rates

The GST Council on Friday refused to lower tax on

Covid-19 essentials citing a lack of unanimity among states and the Centre on the issue. The Council, however, set up a Group of Ministers (GoM) to decide on the rates on the vaccines and medical supplies.

The council, which met after a gap of seven months, took several key decisions, including exemption of duty on import of Covid-19 related items and an amnesty scheme for small and medium taxpayers to reduce the late-fee burden on them.

Briefing the media after the GST Council meeting late evening on Friday, finance minister Nirmala Sitharaman said that the issue of Covid-related items was one item in the agenda that saw a detailed discussion. “The decision over tax rates on Covid vaccines was referred to a Group of Ministers (GoM), which will be announced by June

8, said the Finance Minister. “The council has also decided to exempt the import of relief items, even if they are purchased or meant for donating to the government, or on the recommendation of any state government to any relief agency. This exemption is extended till August 31,

2021,” she said, adding that a GoM has been formed to submit a report on the reduction of rates on Covidrelated items.

The finance minister further said that amphotericin B (the drug used to treat black fungus) has also been included in the exemption list for import tax.

Economic affairs secretary Tarun Bajaj clarified that the ad-hoc exemption was already available on Covid-related items acquired free has been extended till August 31, 2021. “The exemption will depend on the items you're importing,” he said.

For small and medium taxpayers, Normala Sitharaman said an amnesty scheme has been recommended for reducing late fee payable by small taxpayers and medium-sized taxpayers. “Taxpayers can now file their pending returns and avail the benefits of this amnesty scheme with reduced late fees,” she said.

“This scheme is likely to benefit around 89 per cent of those who pay GST," she said, adding that the issue about extending the GST Compensation period, which was widely expected to dominate the discussions, will be taken up at another meeting.

Sitharaman also reiterated that the Centre will also adopt the same old GST compensation formula as last year. “As per a rough estimate, the government will need to borrow `1.58 lakh crore and pass it on to states,” the finance minister said.