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Nirmala replies to Mamata's letter to PM seeking total tax waiver on Covid-related material

In a series of posts on Twitter, Nirmala told Mamata that if full exemption from GST is given, vaccine manufacturers would not be able to offset their input taxes and would pass them on to the end consumer by increasing the price.

Nirmala replies to Mamata's letter to PM seeking total tax waiver-VPN
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New Delhi, First Published May 9, 2021, 7:24 PM IST
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Finance Minister Nirmala Sitharaman has responded to West Bengal Chief Minister Mamata Banerjee's letter to Prime Minister Narendra Modi in which she sought waiving off taxed on vaccines, oxygen concentrators and Covid-related drugs.

In a series of posts on Twitter, Nirmala told Mamata that if full exemption from GST is given, vaccine manufacturers -- who will be unable to offset their input taxes -- would pass them on to the consumer by increasing the price.

The finance minister clarified that these items were already exempted from customs duty and health cess. 

 

 

Integrated GST is also exempted on all Covid relief material imported by the Indian Red Cross for free distribution in the country, Nirmala said, adding that the IGST exemption is given on goods imported free of cost for free distribution in the country by any relief agency or autonomous body having a certificate issued by a state government.

The government has already exempted a host of Covid-related relief material from customs duty import. These include Inflammatory diagnostic (markers) kits, Remdesivir injection and its APIs, medical-grade oxygen, oxygen therapy related equipment like oxygen concentrators and cryogenic tanks, and Covid-19 vaccines.

Besides, the government exempted IGST on import of Covid-relief material received as a donation for free distribution in the country on May 3. The move, Nirmala claimed, helped speed up customs clearances of such imports.

The finance minister said that a 5 per cent GST rate ensures that the manufacturer can utilise ITC and, in case of overflow of ITC, claim the refund. 

"Hence exemption to the vaccine from GST would be counterproductive without benefiting the consumer," Sitharaman tweeted.

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