Covid-19 in India: GST slashed on virus, black fungus medicines

New Delhi - A 5 per cent GST levy on vaccines will continue which will allow manufacturers to get benefit of settling taxes paid on inputs.

The GST Council on Saturday slashed tax rate on Covid-19 drugs such as Remdesivir and Tocilizumab as well as on medical oxygen and oxygen concentrators but ignored demands for reduction in taxes on vaccines. The Council, acting on the recommendation of a group of ministers from different states, cut to nil GST on Covid-19 drug Tocilizumab and black fungus medicine Amphotericin B, from existing 5 per cent. Besides, hand sanitiser, pulse oximeter, BiPAP machine, testing kit, ambulance and temperature check equipment were among the 18 items on which GST rates were lowered.

A 5 per cent GST levy on vaccines will continue which will allow manufacturers to get benefit of settling taxes paid on inputs.

Finance Minister Nirmala Sitharaman explained that the 5 per cent levy will not put any additional burden on common man as the government was procuring all vaccines and giving them to citizens for free.

The reduced tax rates were based on a recommendation of a group of ministers, headed by Meghalaya Deputy Chief Minister Conrad Sangma, and would remain effective till September 30, 2021.

“It was felt that the GoM’s recommendations has brought in a lot of substantial change. Many items, that were at 18 per cent and 12 per cent, brought down to 5 per cent. So there was a lot of substance in the recommendation made by GoM. The Council largely agreed to go with GoM’s recommendation...,” Sitharaman said while briefing reporters after the 44th GST Council meeting here.

Goods and Services Tax (GST) rate on Covid vaccines was, however, retained at 5 per cent as the Council felt that majority of the vaccine procurement was being done by the Centre and given free to people.

“Central government is purchasing 75 per cent and is paying GST also. But the impact of this GST on people will be nil since people would be getting vaccines free of cost at government hospitals. Centre is purchasing and it is given free to people,” Sitharaman said.

Revenue Secretary Tarun Bajaj said vaccines would continue to attract 5 per cent rate and the GST Council discussed that the Centre is purchasing all the vaccines — at least 75 per cent is being purchased by the Centre.

“The GST will also be borne by the Centre. But out of the income from GST, 70 per cent will be shared with the states... As far as people are concerned who are coming to get their inoculation done, it is tax free. It is not an issue with the people, they are not paying any tax, cost of the vaccine. So it is free for them,” Bajaj said.

He said the notification of lower GST rates would be issued “tomorrow or day after”.

While GST on Tocilizumab and Amphotericin B is slashed to nil from 5 per cent, the rate on Remdesivir and anticoagulants like Heparin is lowered from 12 per cent to 5 per cent. GST rate on ambulance has been cut to 12 per cent from 28 per cent.

Tax on medical grade oxygen, oxygen concentrator (including personal imports), ventilators, BiPAP machines and high flow nasal cannula (HFNC) devices has been cut to 5 per cent from 12 per cent.