GST may be exempted on Covid-19 essentials

NEW DELHI: The government may exempt goods and services tax (GST) on essential drugs and other materials used for Covid-19 treatment across their entire value chain on the basis of an end-use certification, which is necessary to check tax evasion through diversion of zero-duty inputs to other industries, two people with direct knowledge of the matter said.

As several states have asked to exempt all Covid-essential materials, equipment, medicines and vaccines from GST, the ‘end usebased exemption’ proposal could be placed before the GST Council, which is the competent authority to decided this matter, they said requesting anonymity.

Several states, including West Bengal and Punjab, proposed the GST waiver. West Bengal finance minister Amit Mitra on Tuesday reiterated Chief Minister Mamata Banerjee’s demand for removing GST on medicines and equipment essential for treatment. “I propose that the Council may agree to accept zero-rated tax for all Covid relevant materials, drugs and vaccines. This will allow the manufacturers and their entire supply chain entrepreneurs to avail input tax credit. Therefore, there would be no adverse impact on prices,” Mitra wrote to Union finance minister Nirmala Sitharaman. HT reviewed the letter.