GoM to look into GST rates on vaccines | Economic Times

The Goods and Services Tax Council has decided to set up a group of ministers (GoM) to look into exemption from the levy for Covid-19 vaccines and other medical products related to treatment of the disease. Imports of the mucormycosis drug Amphotericin B have been exempted from the tax. Industry can import Covid-related medical goods for free distribution without having to pay the levy. The council also approved an amnesty scheme for small taxpayers filing returns late.“The GoM will be formed by tomorrow (Saturday), and any decision on further rate reductions will be taken by the GoM within the next 10 days, by June 8,” Union finance minister Nirmala Sitharaman, also chairperson of the GST Council, said after its meeting on Friday. The GoM will decide on GST exemption for vaccines and reducing the levy on Covid-related items including drugs, medical grade oxygen, oxygen cylinders, oxygen concentrators, pulse oximeters and testing kits. 83051453Several states sought complete exemption for Covid jabs and related medical products.Relief to Small TaxpayersStates including Odisha, Gujarat, Punjab, Chhattisgarh, Kerala and West Bengal sought full GST waiver for Covid vaccines, drugs and related essentials in the public interest amid the second wave of the pandemic.Sitharaman said there was an impasse over exemption on these goods as the council had to be sure about whether it would provide relief to the consumer.“Whether the benefit will go to the intermediary or to the end patient… If you give a relief, will it translate into the charges being charged from the patients or not, these were the questions raised,” revenue secretary Tarun Bajaj said. He added that the GoM would decide on integrated GST relief on concentrators imported as gifts, which currently attract no IGST owing to a Delhi High Court ruling. The council, which met Friday after a gap of over seven months, exempted imports of all Covid-related relief material, either paid or free of cost, for distribution to government hospitals or approved NGOs from IGST until August 31. Industry can now import Covid relief material subject to certification from state governments.“This brings parity on the imports regardless if the same is imported free of cost or paid for, as long as it is for donation purposes,” said Mahesh Jaising, partner, Deloitte India. Among other rate changes, Amphotericin B has been exempted from IGST amid a surge in cases of mucormycosis, also known as black fungus, in Covid patients. GST on diethylcarbamazine (DEC) tablets for treatment of elephantiasis has been reduced to 5% from 12%. GST on maintenance, repair and operation of services for ships or vessels has been reduced to 5% from 18%. IGST will be levied on the repair value of goods re-imported after repairs, while 12% GST will apply on parts of sprinklers or drip irrigation systems sold loose. Serving food in educational institutions, including mid-day meals, examination providers and loans taken by government from banks or financial institutions to give to public sector units, have been exempted from GST. The council deferred a decision to raise GST on footwear and certain textile items to correct the inverted duty structure in the wake of the second wave.Easing ComplianceIn a move to provide relief to small taxpayers, an amnesty scheme has been offered for capping the late fee for non-furnishing Form GSTR-3B for the tax periods from July 2017 to April 2021 to ₹500 for taxpayers paying nil tax and to ₹1,000 for others, if returns are filed by August 31. The upper limit for the penalty was earlier at ₹10,000. “About 89% of the GST taxpayers constitute small taxpayers, who can now file their pending returns and avail the benefit of the amnesty scheme. Late fee has also been rationalised,” Sitharaman said. Annual return filing will continue to be optional for FY21 for small taxpayers with turnover less than ₹2 crore. Reconciliation statements for FY21 have to be furnished by taxpayers with turnover of ₹5 crore or more, she said.Compensation ShortfallThe council also decided to borrow ₹1.58 lakh crore to provide back-to-back loans to states to make up for the compensation shortfall for FY22. This will be on the lines of last year when Rs 1.1 lakh crore was given to states as back-to-back loans to make up for the GST compensation shortfall for FY21.“We will talk to the Reserve Bank of India, Department of Economic Affairs and Department of Expenditure. The Department of Expenditure will write to states on the individual borrowing amounts and take consent,” Bajaj said.He added that if revenue collections for FY22 continue to be above ₹1.15 lakh crore a month, the government could make up for ₹30,000-33,000 crore compensation shortfall for FY 21 as well.The council also has decided to hold a separate meeting on solutions for the collection of compensation cess beyond June 2022. The compensation cess was to be levied for five years when GST was implemented in July 2017, making up for any revenue shortfall that states would suffer.