GST Council meets on May 28; Rates of Covid-19 essentials on agenda

The meeting of the Council is supposed to take place at least once every quarter of a financial year

After a gap of six months, the GST Council meeting will take place on May 28 and is likely to discuss reducing taxes on Covid-related drugs and compensation to states.

According to Council rules, the meeting must take place at least once every quarter. However, the last meeting was held only on October 12.

Finance Minister Nirmala Sitharaman will chair the 43rd GST Council meeting via video conferencing.

West Bengal Finance Minister Amit Mitra and Punjab Finance Minister Manpreet Singh Badal were among others who had demanded an urgent virtual GST Council meet to discuss alarming shortfall that is expected to arise in states’ compensation.

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Mitra wrote to Sitharaman that as per the Centre’s projection, the shortfall was expected to be to the tune of Rs 1.56 lakh crore in 2021-22, without taking into consideration the impact of Covid second wave. With the second wave and lockdowns, the compensation would be much higher than what was projected earlier.

Congress working president Sonia Gandhi had last month demanded that all life-saving drugs, equipment and instruments required to treat Covid-19 patients must be exempted from GST. Mamata Banerjee's Trinamool Congress has also made a similar demand.

Sitharaman had, however, ruled out exempting Covid vaccines, medicines and oxygen concentrators from GST saying such an exemption will make the lifesaving items costlier for consumers as manufacturers will not be able to offset the taxes paid on inputs.

Currently, domestic supplies and commercial imports of vaccines attract 5 per cent Goods and Services Tax (GST), while Covid drugs and oxygen concentrators attract 12 per cent levy.

The Centre had last fiscal year released Rs 70,000 crore to states on account of GST compensation. This is over and above the Rs 1.10 lakh crore released to states under the special borrowing mechanism to compensate them for shortfall in the GST collection this financial year.

As much as Rs 63,000 crore worth compensation is still due to be paid for 2020-21 fiscal year which ended March 31, 2021.

The impact of second wave of the pandemic on GST revenue is likely to be taken into account in the forthcoming GST Council meeting on May 28.

(With inputs from PTI)