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Union Finance Minister Nirmala Sitharaman has virtually ruled out exempting Covid vaccines, medicines and oxygen concentrators from GST, saying such an exemption will make the lifesaving items costlier for consumers as manufacturers will not be able to offset the taxes paid on inputs.
Currently, domestic supplies and commercial imports of vaccines attract a 5 per cent Goods and Services Tax, while COVID drugs and oxygen concentrators attract a 12 per cent levy.
Congress working president Sonia Gandhi had last month demanded that all life-saving drugs, equipment and instruments required to treat Covid-19 patients must be exempted from GST.
To buttress her point on levy of GST on imported goods, Sitharaman said the Centre and states equally split collections made from levy of Integrated GST.
Further 41 per cent of the Central GST revenue is devolved to States. So out of a collection of Rs 100, as much as Rs 70.50 is the share of the states.
From the GST collected on vaccines, half is earned by the Centre and the other half by the States. Further, 41 per cent of Centre’s collections also get devolved to the States. So states end up receiving almost 70 per cent of the total revenue collected from vaccines.
“In fact, a nominal 5 per cent GST is in the interest of the domestic manufacturer of vaccines and in the interest of the citizens,” Sitharaman said.
