As we all are aware, the whole world is battling against the COVID situation, India is also struggling to fight the situation. Health care services have to be fully equipped and with all the necessary goods available for the treatment. But did you know there is a tax levied on COVID-related supplies? Let’s take a brief look.
GST rates on COVID supplies :
PPE Kits 18
Hand wash 18
Alcohol-based sanitizers 18
Cotton masks 5
Non-cotton masks 12
Medical oxygen 12
Oxygen concentrator 12
Oxygen plant 18
Diagnostic services Exempt
Health care services Exempt
Our central government has exempted COVID supplies from the levy of Basic Customs Duty, IGST, and health cess on import, but we are not able to achieve exemption from GST.
As we can see from the chart above how high the tax rates are on essential items. Consumers have to pay those high prices due to which they are demanding exemption from GST or lower rates.
Why GST is levied on COVID supplies?
If the supplies are made fully exempt from GST, manufacturers will not be able to claim an Input tax credit. It results in increased price levels of the products. Thus there is a levy of tax on COVID supplies.
What can be done?
Section 54(3) of CGST Act 2017, states that any registered person may claim unutilized ITC at the end of the tax period, it is applicable only for zero-rated supplies made without paying tax and where
input taxes are higher than output supplies.
Manufacturers can claim ITC using this benefit the law provides.
Another option is that the govt. can bring down the higher rates of 28, 18, and 12 to 5%. That way all the supplies will be affordable at reasonable prices and manufacturers will also not face difficulties. It benefits both the manufacturers and consumers.
After analyzing the situation and the reason why there is GST on these items and what can be done to make the situation better, we
can conclude that, COVID supplies should be made exempt from GST.
In a global emergency like this, COVID related supplies have to be easily available at affordable prices. The central government and the GST council should hold meetings together and discuss the issue and take a decision that is beneficial to both manufacturers and the end consumers.