NEW DELHI: On the back of state governments increasingly putting pressure on the Centre to slash GST rates on Covid essentials, the GST Council’s fitment committee has suggested increasing tax on sin goods to offset the loss in revenue. “In line with the suggestions, GST on some Covid essentials is likely to be slashed.
However, the fitment committee has suggested the amount of revenue foregone and given a list of ‘sin goods’ on which tax can be increased to offset the cost,” a senior finance ministry official said, adding that the quantum of tax, however, will be decided by the Council based on revenue analysis of states. The GST Council is scheduled to meet on May 28 to discuss a host of issues, including reducing GST on essential medicine and equipment and shortfall of GST compensation this year.
While the finance ministry has already given import duty relief on Covid- related medical supplies and vaccines, state ministers have constantly requested for a similar relief on locally produced vaccines too.
During the 43rd meeting of the council, which will take place via video-conferencing, pending issues like reduction of GST on vaccines, Covid-19 related medicine, oxygen cylinder and other items, said sources.
Many states, including Orissa, West Bengal, Punjab have written to the Finance Minister Nirmala Sitharaman requesting lower tax on Covid vaccines. As states have been asked to purchase vaccines for people in the 18-45 years of age group, GST on vaccines would make the purchases costly for them, they said.
Punjab finance minister Manpreeet Singh Badal sought a discussion on floor and band of rates within which states may be allowed to fix their respective state-GST rates as they continue to face a deficit of around 20 per cent of the assured revenue. In the six-page letter dated May 24, he also raised the issue of bureaucrats being allowed to tweak GST rules in the name of enforcement without the political oversight of the GST Council, which sets a “dangerous” precedent.