GST on Remdesivir, medical oxygen, Covid-19 essentials slashed till Sept 30

The Goods and Services Tax (GST) Council on Saturday temporarily removed GST on two medicines, slashed tax rates on 15 other items such as drugs, medical grade oxygen and testing kits to 5%, and reduced the levy on ambulances to 12% for a little over three-and-a-half months in order to provide relief to people fighting the second wave of the Covid-19 pandemic.

GST on Amphotericin B and Tocilizumab has been slashed from 5% to zero, while taxes on Remdesivir and anti-coagulants like Heparin have been reduced from 12% to 5%. A flat GST rate of 5% is kept for all such drugs that would be recommended by the ministry of health and family welfare (MoHFW) and the department of pharmaceuticals (DoP) for Covid-19 treatment.

After the 44the meeting of the council, its chairperson and Union finance minister Nirmala Sitharaman said the levy of 5% GST on Covid-19 vaccines would continue as 75% vaccines are available to people free of cost in government hospitals even as the tax burden would be borne by the Central government.

“These rates will be valid till September as against August-end [that was] recommended by the GoM,” she said. According to the Union finance minister, the GST Council would review the situation later and take a decision on extending the exemption period further. GST Council is chaired by Sitharaman and finance ministers of states are its members.

The 43rd meeting of the council on May 28 had decided to form a group of ministers (GoM) to consider tax-waivers on individual Covid-19 essentials such as vaccines, testing kits, drugs, medical oxygen, oxygen concentrators, ventilators, alcohol-based sanitizer and hand wash. A day later, Sitharaman constituted an eight-member ministerial panel under the convener-ship of Meghalaya chief minister Conrad K Sangma, which submitted its recommendations to the council on June 6.

In order to bring down costs on oxygen, oxygen generation equipment and related medical devices, the council reduced GST these items from 12% to 5%. They are medical grade oxygen, oxygen concentrator, oxygen generator (including personal imports), ventilators, ventilator masks, canula and helmet, BiPAP machine and high flow nasal canula (HFNC) device.

GST rates on Covid-19 testing kits and specified inflammatory diagnostic kits -- D-Dimer, IL-6, Ferritin and LDH – have also been brought down from 12% to 5%.

Other Covid-19 related relief materials have been also made cheaper. While GST on pulse oximeters (including personal imports) has been reduced from 12% to 5%, taxes on hand sanitizer, temperature check equipment, and gas, electric and other types of furnaces for crematorium, including their installation have been slashed from 18% to 5%. Relief is also given on purchase of ambulances by reducing GST on them from 28% to 12%.

MS Mani, senior director at Deloitte India said that the shorter duration of exemptions would make difficult for businesses to plan new investments and expand supply chains. “Businesses engaged in their manufacture and trading would hope that the period is extended beyond 30th September,” he said.

Abhishek Jain, tax partner at consultancy firm EY said that the council’s decision to bring down the GST rates on key Covid-19 relief items would “reduce the cost of such critical Covid-19 items for the end users”.

The GoM was constituted after several states demanded GST waiver on Covid-19 essentials. Other members of the GoM were Gujarat deputy chief minister Nitinbhai Patel, Maharashtra deputy chief minister Ajit Pawar, Goa transport minister Mauvin Godinho, Kerala finance minister KN Balagopal, Odisha finance minister Niranjan Pujari, Telangana finance minister T Harish Rao and UP finance minister Suresh Kr Khanna.