Finance Minister Nirmala Sitharaman is everything will chair the 43rd GST Council meeting on Friday after a break of over seven months. The last meeting of the GST Council took place in October last year, although the Council has to meet once every quarter.
The meeting is vital as there are many important decisions to be made – some of which will have a direct impact on India’s fight against Covid-19 during the second wave.
PRESSURE NO COVID VACCINE, DRUGS
The main agenda of today’s meeting will be a Tax exemption for various drugs, medical devices, and health services. Many states are expected to urge the council to cut off vital medical devices and Covid vaccines after the unprecedented health crisis.
Finance ministers from at least eight states, including Punjab, Tamil Nadu, Chhattisgarh, and Kolkata, are expected to address the issue of GST device and drug waiver related to Covid. They are all likely to push for a zero tax rate on Covid Essentials, PTI news agency reported.
While some medical device and oxygen tax exemptions are expected, reports have shown that the council is not interested in offering a full Covid fundamentals exemption.
It can be noted that Finance Minister Nirmala Sitharaman had earlier this month Exempting the GST for Covid vaccines, drugs and oxygen concentrators has been ruled outand adds that such a move makes life-saving drugs more expensive for consumers and manufacturers.
Domestic supplies and commercial imports of vaccines are currently attracting five percent GST, while 12 percent GST is collected for drugs and oxygen concentrators related to Covid.
DEMAND FOR REMUNERATION OF THE REMUNERATION
Another important discussion that is expected to take place during today’s meeting on State Compensation. States are likely to request an extension of the compensation system for a period of five years as they face a huge loss of revenue due to the pandemic.
It’s worth noting that sovereign defaults are expected to be around Rs 1.6 billion this fiscal year, most of which will likely be financed by borrowing.
In view of the deficit, states are likely to ask for it an extension of the GST remuneration system beyond July 2022. It is worth mentioning that since the introduction of the GST in July 2017, the states have been promised compensation for five years to compensate for the loss of income.
Among other things, a discussion on the structure of the reverse service is expected. In many cases it has been shown that the tax rates for intermediate consumption are higher than those charged for finished products.
At today’s meeting, many states may be calling for a correction to the reverse tariff structure, particularly in key sectors such as fertilizers, steel utensils, solar panels, tractors, tires, textiles, fabrics and more.
According to reports, the GST Council may also consider cutting the GST rate for two-wheelers by 28 percent to give the segment a boost during the ongoing pandemic. A discussion can also take place to bring natural gas under the GST regime.
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