GST reduction on essentials for COVID-19 care-U.P. favours 



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.
Centre may waive GST on items essential for Covid-19 | Hindustan Times

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.


GST Council:

  • It is a constitutional body under Article 279A.
  • It was introduced by the one hundred First (101st) Constitution Amendment Act, 2016.
  • It makes recommendations to the Union and government on issues associated with Goods and service Tax.
  • Council is chaired by the Union minister of finance and other members are the Union State Minister of Revenue or Finance and Ministers responsible of Finance or Taxation of all the States.
  • Vice-Chairperson: The members of the council from the states need to choose one of themselves to be the Vice-Chairperson. they will also decide the term.
  • The Chairperson of the Central Board of Excise and Customs (CBEC) is that the permanent invitee (non-voting) to all or any proceedings of the Council.

GST Compensation:

  • The GST became applicable from 1st July 2017 after the enactment of the 101st Constitution Amendment Act, 2016. With GST, a huge number of central and state indirect taxes merged into one tax.
  • The provision of Compensation cess was introduced for providing compensation to the States for the loss of revenue arising on account of implementation of the goods and Services Tax.
  • It is levied on certain goods like luxury cars, aerated drinks, pan masala and tobacco products, over and above the rate of 28%.
  • As per the goods and Services (Compensation to States) Act, 2017, if a state’s revenue growth falls below 14% during a year, the centre would bridge the shortfall for the primary five years ending 2022.




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