The 44th GST Council Meeting through video conferencing in New Delhi on, June 12th, 2021, Saturday, under the chairmanship of Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman.

On June 12, the GST Council lowered tax rates on most COVID-related supplies and exempted medicines used to treat the black fungus infection from taxation.

The virtual conference, which was conducted to finalize modalities to compensate states for their income deficit of Rs 2.35 lakh crore in the current fiscal year, was hosted by the Union Minister of State (MoS) for Finance Anurag Thakur and finance ministers of states and union territories (UTs).

Following the meeting, Union Finance Minister Nirmala Sithraman announced tax savings on electric cremation furnaces, ambulances, and temperature monitoring devices at a press conference.

Amphotericin B, an antifungal medicine used to treat black fungus, will not be subject to GST, according to Sitharaman. She also stated that from now on, GST rates on drugs such as Amphotericin B will be nil. Previously, both were subjected to a 5Percent GST charge.

Proposal at 44th GST Council Meeting

Reduce the GST rates on some items used in Covid-19 relief and management, such as hand sanitizers, face masks, gloves, PPE Kits, temperature scanners, and other things, and make a judgment on supplies for COVID-19-related specific items based on the Group of Ministers’ statement.

Previous Meeting (43rd GST Council Meeting):

The GST Council forwarded the decision on the tax rates on COVID vaccinations to a group of ministers (GoM) on May 29, 2021, and adopted other decisions to assist the industries affected by Covid-19. In an earlier meeting, the Council decided to ease the compliance burden on small and medium-sized taxpayers by recommending an amnesty program to minimize late fees and provide relief to small taxpayers.

FM Nirmala Sitharaman announces GST cut: How and on what?

In 44th GST Council Meeting on electric cremation furnaces, ambulances, and temperature checking devices.

The GST rates on anti-coagulants such Heparin, Remdisvir, and other pharmaceuticals suggested by the Ministry of Health and Family Welfare (MoHFW) for COVID treatment were set at 5Percent by the council, among other things. They were previously subject to a 12 percent GST rate.

“Vaccines will continue to be subject to a 5Percent GST. The Centre will purchase the 75Percent vaccination as promised, as well as pay the GST. However, states will receive 70Percent of the GST revenue “Sitharaman remarked this as she defended the choice to keep the GST on vaccinations in place.

In addition, the Finance Minister stated that the GST on ventilators, medical-grade oxygen, COVID-19 testing kits, oxygen concentrators, high flow nasal cannula (HFNC) device, pulse oximeters, and BiPAP machines has been reduced from 12 percent to 5Percent.

In addition, the GST rates for hand sanitizers, temperature check equipment, gas/electric/other crematorium furnaces, including their installation, have been reduced. They will now be charged a GST of 5Percent, down from 18Percent previously. In the meantime, the GST on ambulances has been reduced from 28 percent to 12 percent. These exemptions and tariff reductions will be in effect until September 30, 2021.

The choices made in the GST Council meeting were based on the Group of Ministers’ recommendations (GoM). It was constituted during the latest GST Council meeting on May 28 to discuss prospective COVID-related item reductions.

Minister of State for Finance Anurag Thakur, as well as finance ministers from states and union territories, and top bureaucrats from the Union government and states, attended the 44th GST Council meeting.

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Highlights of the 44th GST Council Meeting

  1. The current tax rate of 12 percent on ventilators, medical-grade oxygen, COVID-19 testing kits, oxygen concentrators, and BiPAP machines has been reduced to 5Percent.
  2. The GST on anticoagulants such as heparin, high-flow nasal cannula (HFNC) devices, and pulse oximeters has been decreased to 5Percent from 12Percent.
  3. The current 18 percent GST on hand sanitizers and temperature check equipment has been cut to 5Percent.
  4. Vaccines will continue to be subject to a 4.5Percent GST.
  5. “GST rates have been set for four product divisions: medicines, oxygen, oxygen-generation tools, testing kits, and other materials, and COVID19-related support material.
  6. The GST Council adopted all of the GoM’s rate rationalization recommendations. Ambulances are now subject to a 12Percent GST.
  7. The Centre will purchase the 75Percent vaccination as promised, as well as pay the GST. However, the states will receive 70Percent of the GST revenue.

The 44th GST Council Meeting decided to lower the GST rates on medications used to treat COVID-19, as well as other medical items. These pricing reductions or exemptions will only be in effect until September 30, 2021. The new charges will apply to stock that has just been manufactured. The following are the new GST rates that have been proposed:

Medicines needed for COVID-19 and Black Fungus treatment

Products Old Price percentage New proposed Rate
Tocilizumab 5 Percent Nil
Amphotericin-B 5 Percent Nil
Remedesivir 12 Percent 5 Percent
Anticoagulants such as Heparin 12 Percent 5 Percent
Any other drug (suggested by the Ministry of Health and Family Welfare (MoHFW) and the Dept. of Pharma (DoP) for COVID-19 treatment) Existing rate 5 Percent

Medical equipment needed for COVID-19 treatment

Products Old Price percentage New proposed Rate
Medical Grade Oxygen 12 Percent 5Percent
Oxygen concentrators or generators (that comprise personal imports) 12 Percent 5Percent
Ventilators and ventilator masks or cannula or helmets 12 Percent 5Percent
BiPaP machine 12 Percent 5Percent
High flow nasal cannula device 12 Percent 5 Percent
Pulse oximeters 12 Percent 5 Percent

COVID-19 testing kits and goods used in COVID-19 preventive measures:

Products Current rate Planned rate
COVID testing kits 12 Percent 5 Percent
Genome sequencing kits 12 Percent Same as old
RT-PCR machines 18 Percent Same as old
PPE kits 5 Percent Same as old
N95, surgical and other triple-layer masks 5 Percent Same as old
Hand sanitizer 18 Percent 5 Percent
Temperature equipment 18 Percent 12 Percent

Others:

Products Existing rate Planned rate
Gas or electric or other furnaces for crematoriums, including their installation, etc. 18 Percent 5 Percent
Ambulances 28 Percent 12 Percent

 

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Presumption from the 44th GST Council meeting

The GoM was established on May 29, 2021, to assess the need for lowering GST on COVID necessities and to provide a report to the Finance Ministry by June 8, 2021. The council is convening to consider the report given by the GoM in particular. The 44th GST Council meeting’s solitary item on the agenda is to evaluate the GoM report and decide whether or not to cut the GST rate for COVID necessities.

According to sources, the GoM has recommended keeping the current 5 Percent GST on COVID vaccines while also proposing the following new GST rates for COVID essentials:

Medicines needed for COVID treatment:

Products Existing rate Proposed percentage
Tocilizumab 5 Percent Nil
Amphotericin-B 5 Percent Nil
Remedesivir 12 Percent 5 Percent
Anti-coagulants 12 Percent 5 Percent
Medical O2 12 Percent 5 Percent

 

Additionally, any other drug guided by the Health Ministry for COVID treatment shall be decreased to a 5Percent GST rate.

Medical equipment needed for COVID treatment:

Products Existing rate Proposed percentage
Oxygen concentrator 12 Percent 5  Percent
Ventilators and ventilator masks 12 Percent 5 Percent
BipAp machine 12 Percent 5 Percent
HF nasal canula device 12 Percent 5 Percent
Pulse oximeters 12 Percent 5 Percent

 COVID-19 testing kits and goods used in prevention:

Products Existing rate Proposed percentage
COVID testing kits 12 Percent 5 Percent
Genome sequencing kits 12 Percent Same as old
RT-PCR machines 18 Percent Same as old
PPE kits 5 Percent Same as old
N95, surgical and other triple-layer masks 5 Percent Same as old
Hand sanitiser 18 Percent 5 Percent
Temperature equipment 18 Percent 12 Percent

 Other necessities:

Products Existing rate Planned rate
Crematorium furnaces 18 Percent 12 Percent
Portable hospital units 18 Percent Same as old
Ambulances 28 Percent Same as old

Validity of the re-calculated rates:

The new prices will be in force until September 30, 2021, with the possibility of an extension as the deadline approaches.

‘Extend the time of exemption’

While lowering indirect tax rates is a positive step, MS Mani, Senior Director, Deloitte India, believes that the exemption period should be extended beyond the September deadline to allow firms to plan new investments and strengthen their supply chains.

“While the savings in medication and equipment are beneficial to the public, shortening the exemption period would make it harder for businesses to plan new investments and expand their supply chains to ensure that they reach every corner of the country. Businesses who make and trade goods would like to see the deadline extended beyond September 30th “Mani said.

FMs from states ruled by Congress stage a walkout

According to the finance ministers of Punjab and Chhattisgarh, the central government did not consider the demand of several opposition states for a zero rate for Covid-relief commodities.

According to Badal, Congress finance ministers stormed out of the meeting before it ended to show their displeasure with the Council’s decision on Covid assistance items. Another bone of contention, according to Badal, was the exclusion of the main opposition party from the Group of Ministers formed to look at GST discounts for Covid-relief items.

Other points highlighted by opposition-ruled states, such as extending compensation periods and hiking borrowing limits, were not addressed by the council, according to Chhattisgarh Finance Minister TS Deo.

Conclusion

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