Responding to West Bengal Chief minister Mamta Banerjee’s letter to Prime Minister naremdra Modi seeking GST exemption on Covid-19 vaccines and supplies, Finance Minister Nirmala Sitharaman Sunday said such exemption on domestic supplies and commercial imports would make these items costlier for consumers.
What are the taxes levied currently?
At present 5% GST is levied on domestic supplies and commercial imports of vaccines, While Covid drugs and oxygen concentrators attract 12% GST.
FM’S argument against granting an exemption:
The FM has argued that if GST exemption is granted for domestic supplies and commercial imports of Covid-related drugs, vaccines and oxygen concentrators, Manufacturers would not be able to offset the taxes paid on inpots and pass it on to consumers in terms of higher prices.
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/citizen by increasing the price. A 5% GST rate ensures that the manufacturer is able to utilize ITC(input tax credit) and in case of overflow of ITC, claim refund. Hence exemption to vaccine from GST would be counterproductive without benefiting the consumer, Sitharaman posted on Twitter. If fact, a nominal 5% GST is in the interest of the domestic manufacturer of vaccine and in the interest of the citizens, Sitharaman Says.