GST Council LIVE: GST Council set to meet; Covid-19 vaccine tax rate, states’ compensation shortfall on agenda : 28-05-2021

GST Council Meeting LIVE: The GST Council will meet today after a gap of over seven months to discuss taxation on  covid-19 drugs, vaccines, and healthcare, and also states’ compensation shortfall. Finance Ministers from various states and Union Territories along with the Union Finance Minister will meet through a video conference call and discuss important issues relating to taxation. On the agenda for the long-awaited GST Council meet will be the taxation issues surrounding life-saving covid-19 healthcare services and equipment such as oxygen concentrators, ambulance services among others. State Finance Ministers are also expected to raise the issue of compensation shortfall. GST collections have been inching higher, crossing the Rs 1 lakh crore mark in the previous two months.

Can lower GST on vaccine lead to lower prices?

“A deeper analysis is required to decide whether a GST exemption will actually decrease the price of vaccine or not, as counter-intuitive as it may appear. Ideally, a low nominal GST rate of 0.1% could potentially lead to a lower price for vaccines,” said Sandeep Jhunjhunwala, partner, Nangia Andersen

Vaccine tax exemption

“If full exemption from GST were given, the domestic producers of these items would be unable to offset taxes paid on their inputs and input services and would pass these on to the end consumers by increasing their price,” finance minister Nirmala Sitharaman had said on May 9, in her response to West Bengal chief minister Mamata Banerjee’s letter on the subject to Prime Minister. Banerjee in her letter had sought exemption from GST/Customs duty and other duties and taxes on some items and Covid-related drugs.

Compensation shortfall

State Finance Ministers are expected to raise concerns around compensation shortfall. The Council may deliberate on a likely higher shortfall in GST compensation cess receipts in FY22 with many states demanding that the Centre borrow and transfer the amount to states to bridge the gap like it did last year.

Vaccine tax exemption on agenda

The GST Council is likely to discuss the tax rate on vaccines during its meeting. Various state government have already demanded that GST exemption for vaccines. However, the government has underlined issues of input tax credit if vaccines are exempted.

Source : Financial Express