GST Council Meet On May 28 May Discuss Tax Cut On Covid-Related Items

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GST Council to be held on May 28 will be chaired virtually by Finance Minister Nirmala Sitharaman

After more than seven months, the meeting of the Goods and Services Tax (GST) council will be held on May 28, and is likely to see a lot of discussion on states seeking a cut in GST rates on essential Corona virus supplies, with some even suggesting that they should be made tax-free.

Incidentally the meeting, which is being held at a time when the second wave of the pandemic has been raging across the country resulting in thousands of deaths, is likely to focus more on the abovementioned issue as well as GST compensation being sought by states.

To be chaired by Finance Minister Nirmala Sitharaman, this would be the 43rd meeting of the GST council and will be conducted through video conferencing owing to the raging Corona virus pandemic.

In fact finance ministers of several states had been urging upon Ms Sitharaman to call the meeting of the GST council at the earliest to discuss the above mentioned matter.

The pressure of holding the meeting on the Centre was all the more as the previous GST council was held more than seven months ago on October 5, 2020.

Punjab finance minister Manpreet Singh Badal in a letter written recently to Ms Sitharaman had asked the Centre to consider GST exemption on essential Corona virus related items like hand sanitisers, face masks, gloves, PPE Kits, temperature scanners, oximeters and ventilators among others.

He also highlighted that life-saving items for Corona virus have basic custom duties of up to 20 per cent and GST of up to 18 per cent, and said that they need to be tax free.

Recently, Ms Sitharaman had clarified that doing away with the 5 per cent GST on Corona vaccines will negatively impact the prices as “manufacturers would be denied input tax credit who will, in turn, pass on this to the consumers as a cost”. 

In his five-page letter to the Union Finance Minister, Mr Badal said even though the GST council is meeting after eight months, the agenda for it is “mundane”‘ and does not deal with substantive issues that have been raised in the past.

Earlier on May 12, West Bengal finance minister Amit Mitra had written to Ms Sitharaman, seeking an urgent meeting of the GST council to discuss the critical issue of increasing the compensation of Rs 1.56 lakh crore earmarked for states in 2021-22.

With states imposing lockdowns due to the second Covid-19 wave, their compensation could be much higher than what the Centre estimated, he had written in the letter.

The Union Finance Ministry on May 15 had announced that the GST council meeting will be held on May 28.

Meanwhile the GST council, apart from tax waiver on essential Corona virus related essential items, is also likely to discuss another key issue of compensation to states as well as bringing natural gas into the indirect tax fold.

States want an extension of the GST compensation beyond July 2022 as economic uncertainty continues in the wake of the pandemic.

States were promised compensation for five years after GST implementation in July 2017 to make up for revenue shortfall, if any. This was done as states lost autonomy over indirect taxes due to the GST rollout.



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