The fitment committee of the Goods and Services Tax (GST) Council has recommended not to exempt GST on COVID-19 vaccines from the present rate of 5%. The fitment committee is a key panel consisting of Centre and state officials, which reviews the GST rate change proposals to be placed in front of the Council for discussion.
Few states have demanded that COVID-19 vaccines be exempted or levied at a minimal tax rate of 0.1%. However, the committee said that providing complete exemption would result in increased cost of production, as the COVID-19 vaccines domestic manufacturers would not be able to claim Input Tax Credit (ITC) for tax paid on their input goods and services.
The fitment panel has argued that since vaccines were almost entirely procured by the central and state governments and provided free of cost to the public, the GST would eventually accrue to the Centre and states.
However, the fitment committee recommended reducing the GST rate on pulse oximeters, medical-grade oxygen, and oxygen concentrators to 5% from 12% until the end of July 2021. However, the GST rate reduction on COVID-19 testing kits to 5% is recommended till the end of August 2021.o
Despite the demands for lowering GST rates on COVID-19 related drugs and medicines, the committee has not recommended as the COVID-19 treatment protocol was being altered based on new learnings.
The fitment committee recommendations are likely to be taken up at the 43rd GST Council meeting on 28th May 2021 (Friday), in which a final decision will be taken.
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DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.