New Delhi: The government on Saturday constituted an eight-member ministerial panel under the convenership of Meghalaya chief minister Conrad K Sangma to examine Goods and Services Tax (GST) exemptions on a range of Covid-19 essentials such as vaccines, drugs, testing kits and ventilators, according to the Union finance ministry.
Other members of the group of ministers (GoM) are – Gujarat deputy chief minister Nitinbhai Patel, Maharashtra deputy chief minister Ajit Pawar, Goa transport minister Mauvin Godinho, Kerala finance minister KN Balagopal, Odisha finance minister Niranjan Pujari, Telangana finance minister T Harish Rao and UP finance minister Suresh Kr Khanna.
The GoM will submit its recommendations to the GST Council on or before June 8, the Union finance ministry said. After a protracted discussion on the issue of tax exemptions at the GST Council meeting on Friday, the apex federal body decided to form a committee to examine the merits of waivers on individual items.
According to its terms of reference, the GoM “will examine the need for GST concession/exemption” on Covid vaccines, drugs and medicines for Covid treatment, testing kits for Covid detection, medical grade oxygen, pulse oximeters, hand sanitisers, oxygen therapy instruments (concentrators, generators and ventilators), PPE kits, N95 masks, surgical masks, temperature checking thermometers and any other items required for Covid relief.
While vaccines and cotton masks attract 5% GST, most of these items fall in the 12% tax slab. Testing kits, drugs, medical oxygen, oxygen concentrators and ventilators fall under the 12% tax bracket. Alcohol-based sanitisers, hand wash gels, disinfectants and thermometers attract 18% GST.
The GoM was constituted after several member states of the council, such as West Bengal and Punjab asked for exempting all Covid-essential materials. West Bengal finance minister Amit Mitra on May 25 reiterated chief minister Mamata Banerjee’s demand for removing GST on medicines and equipment essential for the treatment of Covid patients. Earlier on May 9, the West Bengal CM wrote a letter to Prime Minister Narendra Modi urging GST exemption on Covid relief material.
Reacting to the letter, Sitharaman had said that GST exemption on the end product alone would distort the input tax credit system across the value chain, and eventually cost more to the consumer. “If full exemption from GST were given, the domestic producers of these items would be unable to offset taxes paid on their inputs and input services and would pass these on to the end consumers by increasing their price,” she said in a tweet on May 9.
Ritesh Kanodia, partner at consultancy firm Dhruva Advisors LLP said: “The issue of whether or not vaccine should be included in the exemption list has also to be seen from the perspective of whether granting the exemption will result in the passing of any effective benefit to the end consumer.”