Finance Ministry notifies GST rate cuts on Covid essentials

Shishir Sinha New Delhi | Updated on July 09, 2021

Experts call for clarity on existing stock

The Finance Ministry has notified nil or lowered rate of GST on 18 individual Covid relief products. These include medicines, hand sanitizers, pulse oximeters, temperature checking equipment beside others.

Based on the decision of the GST Council meeting held on June 12, these lowered rates will be effective till September 30. Accordingly, there will be no tax levied on medicines like Tocilizumab and Amphotericin B while 5 per cent GST will be levied on Remdesvir and Heparin (anti-coagulant). Among other products, 5 per cent GST will be applicable for hand sanitizers, pulse oximeters and oxygen concentrators/ generators beside others. Ambulances will attract 12 per cent GST.

Applicability on existing stock

On whether the lowered rates will be applicable on existing stock also, a senior government official told BusinessLine that GST was not akin to excise duty. “Since GST applies all the way till the retail end, the new rates will apply regardless of what stage of the value chain the stock is in,” he said. However, there is no clarity in the notification regarding applicability of lowered rates on existing stock. Keeping this in mind, experts call for detailed circular so that people should get maximum benefit while there should not be any anti-profiteering litigation against companies or pharmacies.

Smita Singh, Partner with Singh & Associates, said the Government at the time of introduction of GST had allowed amendment to the MRP on unsold stock manufactured, packed prior to July 1, 2017. Such relaxation was provided by labelling these goods till September 30, 2017 and the relaxation continued till December 31, 2017 due to rate change post implementation of GST.

Further, when GST Council had reduced rates for several commodities on July 21, 2018, the Consumer Affairs Ministry allowed affixing of stickers or stamping or online printing of reduced MRP on goods that were unsold on July 27 2018, later extending it till December 31, 2018. The relaxation also allowed use of packaging materials or wrapper which were not exhausted, to be used till December 31, 2018 after making corrections in retail sale price.

“Considering the past position where on downward revision of GST rates, companies were allowed to paste new stickers, similar relaxations must be allowed by the Government bearing in mind that various commodities now qualifying for lower GST rates that are in stock should be sold after use of new stickers to commensurate the reduced rates on goods till effective date of such revisions. The intention behind the reduction in rates demand such relaxation, so that benefit of reduced rates reach the consumers,” she said.

Published on June 15, 2021

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