GST Council Meeting: The content related to COVID-19 like medicines, vaccines and medical devices will be considered to reduce the GST rate.
Finance Minister Nirmala Sitharaman
The GST Council meeting is going on today. Finance Minister Nirmala Sitharaman will hold a press conference at 7 pm. In this press conference, the Finance Minister will give information about the decisions taken in the GST Council. The content related to COVID-19 such as medicines, vaccines and medical devices will be considered to reduce the GST rate. Apart from this, the modalities to compensate the states for revenue loss will also be discussed.
The 43rd meeting of the GST Council led by Finance Minister Nirmala Sitharaman is being held through video conference. This council meeting is the first meeting in about 8 months.
Pressure to reduce tax on goods related to COVID
Before the meeting, non-BJP ruled states such as Rajasthan, Punjab, Chhattisgarh, Tamil Nadu, Maharashtra, Jharkhand, Kerala and West Bengal have prepared a joint strategy to press for zero tax rate on essential items related to COVID. The GST Council consists of representatives from all states and union territories.
GST compensation will also be discussed
Apart from discussions on tax rates, an estimated amount of Rs 2.69 lakh crore will also be discussed in the Council. While implementing the GST regime in the year 2017, it was promised to compensate the states for their revenue loss by persuading them to give up their right to levy VAT and other taxes.
The fitment committee on GST rates has submitted a report to the council on the effect of zeroing the tax rate on COVID vaccines, medicines and other devices. This committee includes tax officials from the Center and the states. If the final product is exempted from GST, the manufacturers will not have the option to claim the benefit of input tax credit on the raw material. In such a situation, consumers will not get any special benefit.
Sanitary napkins were out of the purview of GST
In the year 2018, the council had made sanitary napkins GST free on the demand of many women’s organizations. It was taxed at the rate of 12 per cent. But after the GST was exempted, the consumers did not get any significant benefit as the manufacturers did not get the benefit of refund of the tax levied in the supply chain.
Finance Minister had said this thing
Finance Minister Nirmala Sitharaman, earlier this month, dismissed the demand for exemption of COVID-related vaccines, medicines and oxygen concentrators from the GST, saying that such a life-saving item would be costlier for consumers. It will be because its manufacturers will not get the benefit of tax paid on raw materials.
Currently, GST is levied at the rate of 5 per cent on domestic supply of vaccines and imports on commercial basis, while GST is applicable on 12 per cent on COVID drugs and oxygen concentrators.
Estimated decrease in revenue of 2.69 lakh crore in the current fiscal
As far as the revenue compensation of the states is concerned, the Center has estimated a shortfall of Rs 2.69 lakh crore in this item during the current financial year. The Center is expected to get Rs 1.11 lakh crore from the cess applicable on luxury, detriment and tobacco products while the remaining Rs 1.58 lakh crore will have to be raised by borrowing.
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