IGST exemption on Import of Oxygen Concentrators for Personal Use

The 43rd GST Council meeting scheduled on 28th May 2021 might decide on the Goods and Services Tax (GST) levy of 12% on the import of oxygen concentrators for personal use. Last week, the Delhi High Court said that imposing a 12% Integrated GST (IGST) on oxygen concentrators received for personal use or as gifts is “unconstitutional”.

The High Court made these comments during proceedings on a plea filed by an 85-year old COVID patient who received an oxygen concentrator from a relative residing in the United States. The court also quashed Notification No. 30/2021-Customs dated 1st May 2021 issued by the Finance Ministry, stating that a 12% IGST will be levied on oxygen concentrators imported for personal use or gift.

The government had already notified IGST exemption to states and agencies authorised by states on free import of oxygen concentrators for COVID relief. The IGST exemption benefit can be extended to personal import as gifts for individual use by implementing the Delhi High Court decision.

The government may consider accepting the judgment and extending the benefit considering the enormity of the pandemic situation, a life-saving measure and insignificant revenue loss. Tax experts feel that the Council may decide to exempt IGST on these imports as the revenue implications would not be much. 

On 1st May 2021, the government had reduced the IGST rate to 12%, from 28%, for the import of concentrators for personal use. The reduced rate would be applicable up to 30th June 2021. The import of oxygen concentrators for commercial use also is taxed at 12% IGST.

The COVID-19 vaccines domestic supplies and commercial imports attract a 5% GST and the COVID drugs attract a 12% levy. However, the Centre earlier ruled out exempting COVID vaccines, medicines and oxygen concentrators from the levy of GST tax, saying such an exemption will make the life-saving items costlier for consumers as manufacturers will not offset the taxes paid on inputs.

The upcoming 43rd GST Council meeting on 28th May 2021 is also likely to discuss tax rate cuts on COVID-19 essentials, besides the compensation shortfall of states.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in

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