Sushil Modi suggests levying 0.1% CGST, SGST on Covid vaccines

Senior BJP leader Sushil Modi on Tuesday suggested levying 0.1 per cent each of CGST and SGST on vaccines, oxygen ventilators and other essential medical devices required for treating coronavirus infections. Modi was closely associated with the GST Council during his tenure as the Finance Minister of Bihar. He had also served as the Deputy Chief Minister of Bihar. While the GST Council is expected to soon take a call on the GST (Goods and Services Tax) rates for these items, Modi said the most feasible option appears to be to charge a nominal tax and make them more affordable amid the pandemic.

Currently, there is a 5 per cent GST on domestically manufactured vaccines while it is 12 per cent for Covid drugs and oxygen concentrators. "Giving exemption from GST to Covid vaccines, ventilators or other essential medical devices may not be a feasible option as it will eventually increase prices for the end-users, as manufacturers would not get the input tax credit," Modi told PTI.

Modi also pointed out that bringing these medical devices and vaccines "zero-rated under the GST regime would require amendment in the GST Act from all State Assemblies and Parliament, which will be a time-consuming step".

"My suggestion would be to charge 0.1 per cent, both CGST and SGST, on vaccines, oxygen ventilators, oxygen concentrators, thermometers and other essential drugs and medical devices required for treatment of Covid. By doing this, manufacturers can claim input tax credit while prices will be relatively lower," Modi said. He emphasised that it was his personal view and ultimately, the Council will take a call. CGST refers to Central GST while SGST stands for State GST. Emphasising that the ultimate aim is not to garner revenues but to help end consumers, he also suggested that drugs and medical devices should be treated as deemed export items.

Describing the GST Council as "a successful example" of cooperative federalism, he said that till date, barring one occasion, all decisions taken by the Council were unanimous. On May 28, the GST Council could not decide on tweaking taxes on Covid vaccines and medical supplies as the BJP and Opposition-ruled states sparred over whether tax cut benefits will reach the common man.

The Council then decided to set up a Group of Ministers (GoM) to decide on GST relief on Covid essentials. The GoM submitted its report to Finance Minister Nirmala Sitharaman, who is chairing the Council, on Monday. The report of the panel of state ministers would be discussed in the next GST Council meeting, which is expected soon.

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