Amid calls for lower levies on items and medicines required in COVID-19 treatment, the GST Council on Saturday decided to slash rates of several COVID-relief items to 5% from existing 12-18% levels, although it kept the much talked-about tax rate on vaccines unchanged at 5%. Addressing the media post the GST Council meeting, Finance Minister Nirmala Sitharaman said that the council agreed to go with the recommendations of the Group of Ministers (GoM) that was the single point agenda on the council on Saturday.
She said that while the rate of tax on various COVID-19 relief medical items has been reduced, no change had been made in the 5% GST rate on vaccines but it would not impact the public as vaccination is being provided for free.Sitharaman said that the Union government will be paying and receiving 75% of all the tax collected on it, which will be further distributed with states. She had earlier said that exempting vaccines from GST would deny input tax credit on raw material and supplies that could impact its pricing.
As part of COVID-19 relief measures, the 44th meeting of the GST Council reduced the GST rate on Remdesivir to 5% from 12% and that of medical grade oxygen to 5%. The council has also reduced the rates on Amphotericin B, medicine used for black fungus and brought it to nil level exempting 5% rate. The tax rate on Tocilizumab, used for treatment of COVID-19 has also been waived off. The previous tax rate was 5%. The rate on anticoagulants like Heparin has also been slashed to 5%.
Further, the council headed by the Finance Minister also decided that the tax rate on any other drug recommended by the Ministry of Health and Family Welfare (MoHFW) and Department of Pharma (DoP) for COVID-19 treatment, would be kept at 5%.
In terms of life saving equipment and products, low availability of which caused a lot of panic across the country, both in the first and the second wave including medical grade oxygen, oxygen generators and ventilators, have also been reduced. GST on medical grade oxygen, oxygen concentrator, generators, including personal imports, ventilators, BiPAP Machines and high flow nasal cannula devices has been reduced from 12% to 5%.
Low availability of medical grade oxygen in hospitals was witnessed during the initial period of the second wave of COVID-19 and in the first wave, it was the lack of ventilators which was a grave concern in the country. Rates of pulse oximeters, hand sanitisers, temperature check equipment, gas, electric or other furnaces for crematorium, including their installation among others have also been reduced to 5%. Now, COVID-19 testing kits too would be taxed at 5%, against the previous rate of 12%.
In another major move, the GST rate on ambulances has been reduced to 12% from the previous 28%. The special duty cuts would be applicable till September 30, 2021. Sitharaman said that though GoM recommended the rate cuts till August, the council decided to keep it till September ended and will later decide if further extension is required.
Commenting on the decisions, MS Mani, Senior Director of Deloitte India said, "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 30."