Ahead of the Goods and Service Tax (GST) Council meeting on May 28, Punjab Finance Minister Manpreet Singh Badal has written to Union Finance Minister Nirmala Sitharaman saying that the agenda of the meeting is "mundane" and "does not deal with any of the substantive issues that confront us".
In the letter to the FM, Badal called for urgent measures on the pandemic front. Badal said in the letter dated May 24, "In view of the prevailing position the country finds itself in today, we need to take some urgent measures on the pandemic front."
"You will notice that many goods suffer basic custom duty ranging upto 20 per cent and GST upto 18 per cent besides a social welfare surcharge of 10 per cent. As IGST is charged at on taxable value that includes import duties, the effective burden exceeds by 2-3 per cent," Badal pointed out in the letter.
The letter goes on to mention that GST of 18 per cent is levied on protective garments, digital thermometers, laboratory sanitisers and disinfectants, paper bed sheets and road transport tankers for oxygen. The letter says that medicines/APIs for Covid (Remdesivir, Doxycycline, Ivermectin, Fabiflu, and Tocilizumab) have GST rates of 18 per cent or 12 per cent.
"Covid test kit, covid vaccine, oxygen concentrators medical oxygen, nebulisers have GST of 12 per cent," the letter said. "It is baffling that despite the crisis our country finds itself in, with millions of people suffering the consequence of Covid and inadequate health infrastructure, taxes this high continue to apply on basic essentials needed to overcome this life threatening disease that has engulfed the entire world."
The rate fitment committee under the GST council met last week and discussed the taxation on the vaccine. The meeting took place in the backdrop of West Bengal CM Mamata Banerjee demanding GST relaxation on vaccine. Responding to Banerjee, FM took to social media to point out exempting the vaccine from GST will turn counterproductive as manufacturers who won't be able to offset their taxes paid on inputs and may in turn raise prices.
However, the rate fitment panel has examined the issue and is likely to recommend a zero tax rate for the vaccine in the upcoming meeting of the GST Council later this week.
Badal also made a point in the letter related to excessive delegation and acting through officers bypassing the sanctity and constitutional mandate of the GST Council.
Earlier this month, West Bengal finance minister Amit Mitra had urged the Centre to call for a meeting of the council to discuss enhanced compensation to the states in wake of the second wave of the Covid-19 pandemic leading to lockdown and restrictions.
"As per GoI projection, the shortfall was expected to be Rs 1,56,164 crore in 2021-22, without taking into consideration the impact of Covid Wave-2. Now due to Covid Wave-2 and lockdowns, the compensation will be much higher than what was earlier projected," Mitra said in the letter.
The last GST council meeting was held in October last year.
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