The GST Council on Friday left taxes on COVID-19 vaccines and medical supplies unchanged after the BJP and Opposition-ruled states sparred over whether the tax cut benefits will reach the common man.
Congress and other Opposition-ruled states have been demanding a reduction in taxes, but the central government felt the move may not result in tangible gains for people. "It is one thing to rush to say – do this, it will benefit the common man. But when the technical, fitment and law committees go into the details, you realize that that could have collateral impact on many others," Finance Minister Nirmala Sitharaman said.
"I am not talking about the revenue generation aspect, but how many other items will get included in it as a result of which how you are going to implement it," she added. Briefing reporters after the 43rd meeting of the GST Council, the finance minister said a ministerial panel will be constituted to decide on the rates on the vaccines and medical supplies. The panel will submit its report by June 8.
"When these benefits, because they are going to manufacturers or intermediaries, (will) be passed over to the end user, the patients, on that there were different views. "And therefore, I suggested that a GoM (Group of Ministers) go into details and take a call. As a Council, we are responsible to see how it reaches the common man… the GoM will come back to us and we will take a final call," Sitharaman said.
The
GST Council in its meeting decided to exempt levies on the import of
coronavirus relief material till 31 August, even if they are imported on
payment basis or free of cost for donating to the government or a
state-approved agency. ‘Amphotericin B’ which is a medicine used for treatment
of black fungus has also been included in the exemptions list. Finance
Minister Nirmala Sitharaman announced
on Friday.
"Adhoc
exemptions have been given for Covid-related equipment. As a Council we are
responsible for tax relief reaching the end-user, the common man, which is why
there was an impasse on exempting Covid-19 related material," FM
Sitharaman has said.
Issues of Covid-related equipment was one of the items on the agenda that had a very detailed discussion.
Key takeaways from FM Sitharaman's address :-
- One of the biggest decisions today is the reduction of the compliance burden of small taxpayers and medium-sized taxpayers. Late fee, Amnesty-related matters also decided upon. To provide relief to small taxpayers, an Amnesty scheme recommended for reducing late fees payable in these cases.
- Taxpayers can now file their pending returns and avail the benefits of this Amnesty scheme with reduced late fees, FM Sitharaman said.
- Late fees have also been rationalized. The rationalized late fee and the decision to reduce the maximum amount of late fee for small taxpayers will come into effect for future tax periods. This will provide a long-term relief to small taxpayers: FM Nirmala Sitharaman
- To provide relief to taxpayers, late fee for non-furnishing of GSTR-3B for July 2017 to April 2021 has been capped at Rs 500 per return for those taxpayers who did not have any tax liability. For those with tax liability, a maximum Rs 1,000 per return late fees would be charged, provided such returns are filed by August 31. Besides, filing of annual returns for 2020-21 fiscal for taxpayers with aggregate turnover of up to Rs 2 crore has been made optional.
- The GST Council will assemble for a special session later to ensure there is a discussion on the compensation cess post-2022: Sitharaman
- "As we are in the last of the 5 years of 14% compensation protected revenue arrangement, I've assured the members, we'll hold special session of GST Council, exclusively on single-point agenda of how compensation cess be collected, how long, how much, beyond July 2022," the FM said.
- On GST compensation cess, same formula as last year to be adopted this year too. Rough estimate is that Centre will have to borrow ₹1.58 Lakh crore and pass it on to the states, says FM Sitharaman
- Due to rising cases of black fungus, Amphotericin B has also been included in the exemptions list: FM Nirmala Sitharaman
- I've decided and announced in Council that a Group of Ministers quickly formed who will submit their report within 10 days - on or before 8 June, so that if there are any further reductions which need to be done will be done, in the sense, that rates will be decided by them: FM
- ₹4,500 crore was paid to two Covid-19 vaccine manufacturers, as advance payment. The country is engaging with suppliers and manufacturers including Japanese, European Union for vaccines. In the coming months, supply will be more than what it is, the FM said.
Ahead of the first meeting of the top decision-making body, finance ministers of eight states ruled by non-BJP and its like-minded parties -- Rajasthan, Punjab, Chhattisgarh, Tamil Nadu, Maharashtra, Jharkhand, Kerala and West Bengal -- had devised a joint strategy to press for a zero tax rate on Covid essentials.
Currently, domestically manufactured vaccines and commercial imports of vaccines attract a 5% GST, while Covid drugs and oxygen concentrators attract a 12% levy.
With regard to the issue of compensation payable to states, the Centre has estimated the shortfall at ₹2.69 lakh crore.
The Centre expects to collect over ₹1.11 lakh crore through cess on luxury, demerit and sin goods which will be given to the states to compensate them for the shortfall in revenue arising out of GST implementation.
The remaining ₹1.58 lakh
crore would have to be borrowed to meet the promised compensation.
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