The 43rd Goods and Services Tax (GST) Council meeting held on May 28 was chaired by Finance Minister Nirmala Sitharaman and sources told CNBC-TV18 that the top decision-making body, which met after seven months has decided to maintain 5 percent GST on COVID-19 vaccines and other virus-related products.
However, sources added that the GST Council is likely to meet again in a few days to consider further GST rate cuts on COVID-related material.
At the meeting, the Council discussed the shortfall of GST compensation to states, which is estimated at Rs 1.6 lakh crore for the current fiscal. Reports had suggested that the council would discuss lowering of taxes on COVID-19 related products, including vaccines and medical equipment.
Earlier in the day, Congress leader Priyanka Gandhi Vadra urged the Centre to remove GST on all life-saving medicines and equipment being used in the fight against COVID-19, asserting that charging tax on such items amid the pandemic amounts to "cruelty". Her appeal to the government came ahead of the GST Council meeting, which decides on taxes on goods and services, later on Friday.
Recovering GST on COVID-related products from people who struggled for ambulances, beds, ventilators, oxygen, medicines, vaccines during the pandemic amounts to "cruelty and insensitivity", Priyanka Gandhi said in a tweet in Hindi. "Today, in the GST Council, the government should remove GST on all life-saving medicines and equipment being used in the fight against COVID," the Congress general secretary said.
Ahead of the first meeting of the top decision-making body, finance ministers of eight states ruled by non-BJP and its like-minded parties -- Rajasthan, Punjab, Chhattisgarh, Tamil Nadu, Maharashtra, Jharkhand, Kerala and West Bengal -- have devised a joint strategy to press for a zero tax rate on COVID essentials, sources said. Besides discussion on tax rates, the council may also deliberate on the estimated Rs 2.69 lakh crore that states need to be provided as per the promise in 2017 to make good any loss in revenue they suffer because of giving up their right to levy VAT and other taxes.
Sources said the Fitment Committee on GST rates, comprising tax officers of centre and states, has also given its report to the council listing out the pros and cons of waiver and zero-rating of COVID vaccines, drugs and other equipment. Exempting final product from GST would deny manufacturers from claiming the benefit of the input tax credit on raw materials and hence not much benefit accrues to consumers.
With inputs from PTI.
(Edited by : Jerome Anthony)
First Published: IST