GST reduction on essentials for COVID-19 care-U.P. favours
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The Uttar Pradesh government is in favour of reducing the products and Services Tax (GST) levied on COVID-19 essentials to minimise costs borne by people.
- The GST Council recently had formed a Ministerial group to review demands for slashing the tax rates or exempting COVID-19 supplies from GST.
- The Group of Ministers (GoM) was given 10 days to review and recommend.
- In previous GST council meeting:
- It agreed to increase the GST exemption granted on relief material received free from abroad for donations to State-approved entities.
- With the rising cases of Black Fungus, a specific medicine required for it (amphotericin-B) has also been included within the exemption list (for tax-free imports).
- The Delhi HC decision (the 12% GST levy on imports of oxygen concentrators for private use) led to a situation where GST levies are going to be zero if the item is received as a ‘gift’.
- But 28% if purchased from abroad.
Recommendations by the Group of Minister (GoM):
- Levying a 0.1% GST on COVID-19 material ranging from:
- Vaccines currently taxed at 5%,
- Drugs currently taxed at 12% and
- Oxygen concentrators and cylinders are currently taxed at 18%.
Observations by the Group of Minister (GoM):
- The States had not raised taxes on petroleum products despite the financial difficulties posed by the pandemic.
- On States’ GST compensation dues, U.P. had no pending dues since last year.
Compensation to states:
- The Centre has announced a ₹1.58-lakh crore borrowing decide to meet States’ GST compensation dues this year.
- The rating agency ICRA has estimated that ₹97,700 crores of States’ dues remain pending since last year and need to be paid this year, that the funding options are unclear.
SOURCE: THE HINDU