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GST Council cuts tax rate on COVID-19 essentials


The Goods and Services Tax (GST) has been waived for two critical drugs against COVID-19 and black fungus, Tocilizumab and Amphotericin B, while tax rates have been reduced to 5% on 14 major pandemic relief goods, including testing kits and hand sanitisers, from prevailing rates in the range of 12% and 18%.   

Ambulances, which are currently taxed at 28%, will now attract a GST levy of 12%, Finance Minister Nirmala Sitharaman said on Saturday, announcing these concessional rates following a meeting of the GST Council to discuss the indirect taxes levied on COVID-19 supplies.   

The reduced rates, which Revenue Secretary Tarun Bajaj said were aimed at providing some succour to the people amid the pandemic, will remain effective till September 30, but could be extended further based on later assessments.  

The 5% GST levied on vaccines was left unchanged, following the recent changes in the country’s vaccine procurement strategy that puts the Union government in charge of augmenting supplies.  

“When it was discussed, it was mentioned that the Centre is buying 75% of the vaccines and will remit the GST on it and the revenue on that will be shared 70% with the States,” Mr Bajaj said, explaining that this will have no implications for people as they will receive the vaccine for free.   

“This particular GST Council meeting is a single agenda meeting to discuss the recommendations of a group of ministers (GoM) set up at our last meeting (on May 28) ,” Ms Sitharaman said, stressing that no other subjects such as compensation to States were discussed.  

The recommendations of the GoM, led by Meghalaya chief minister Conrad Sangma, were accepted by the Council, except for three items, where its proposed rates were reduced further, she said.  

This includes electric furnaces used in crematoriums, where the GoM had suggested as 12% GST rate, but the Council has reduced it to 5%. Similarly, for temperature checking equipment, the GoM had recommended an 18% GST which has been slashed to 5%.  

On ambulances, the GoM had recommended a 28% rate. “However, after discussions, because of the crisis and as this is an enduring asset for hospitals, we thought even ambulances should be brought down. So the rate on ambulances has been brought down to 12%,” Ms Sitharaman said.  

Drugs & Devices covered  

The GST rate on Remdesivir and anti-coagulants like Heparin has been reduced from 12% to 5%, with the Council recommending that the same rate be levied on any other drug that may be recommended by the Health and Family Welfare Ministry and the Department of Pharma for COVID-19 treatment.  

For oxygen concentrators, medical grade oxygen and related devices such as ventilators, BiPAP machines, the GST rate has also been brought down to 5% from 12%. The same reduction has been approved in the levies on COVID-testing kits and pulse oximeters.  

The 5% GST will apply to personal imports of oxygen concentrators as well as pulse oximeters. The 18% GST payable on hand sanitisers has been reduced to 5% as well. Revenue Secretary Mr Bajaj said that the rate changes will be notified over Sunday and Monday.  

Experts said the new rates will provide some relief to people by reducing medical treatment costs, but the limited period till September for which the lower rates have been proposed, is problematic.  

“While the reductions on medication and equipment are good welfare measures, curtailment of the exemption period would make it difficult for businesses to plan new investments and expand their supply chains in order to ensure that they reach all corners of the country. Businesses engaged in their manufacture and trading would hope that the period is extended beyond September,” said MS Mani, senior director, Deloitte India.  

 

The details of recommendations are given below:

S. No.

Description 

Present GST Rate

GST Rate recommended by GST Council

 
A. Medicines    
1 Tocilizumab 5% Nil 
2 Amphotericin B 5% Nil 
3 Anti-Coagulants like Heparin 12% 5%
4 Remdesivir 12% 5%
5 Any other drug recommended by Ministry of Health and Family Welfare (MoHFW) and Dept. of Pharma (DoP) for Covid treatment Applicable Rate 5%
 
B. Oxygen, Oxygen generation equipment and related medical devices    
1 Medical Grade Oxygen 12% 5%
2 Oxygen Concentrator/ Generator, including personal imports thereof 12% 5%
3 Ventilators 12% 5%
4 Ventilator masks / canula / helmet 12% 5%
5 BiPAP Machine 12% 5%
6 High flow nasal canula (HFNC) device 12% 5%
    
C. Testing Kits and Machines    
1 Covid Testing Kits 12% 5%
2 Specified Inflammatory Diagnostic Kits, namely D-Dimer, IL-6, Ferritin and LDH 12% 5%
 

D.

Other Covid-19 related relief material

 

 

1 Pulse Oximeters, incl personal imports thereof 12% 5%
2 Hand Sanitizer 18% 5%
3 Temperature check equipment 18% 5%
4 Gas/Electric/other furnaces for crematorium, including their installation, etc. 18% 5%
5 Ambulances 28% 12%

 

 



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