Finmin turns down India Inc’s plea for IGST exemption on imported Covid relief material

Shishir Sinha New Delhi | Updated on May 08, 2021

Only State Government’s authorised entity will get exemption and distribute freely

Finance Ministry has turned down India Inc’s plea for IGST (Integrated Goods & Services Tax) waiver on Covid material imported from abroad and distribute here freely. It also made it clear only agencies approved by the State Government will get exemption.

IGST is applicable on supply of goods and services in both cases of import and export. It is levied on inter-state supplies. On May 3, the Finance Ministry gave ad hoc exemption from IGST on imported relief materials but with certain conditions.

In a set of answers to frequently asked questions (FAQ), the Central Board of Indirect Taxes and Custom (CBIC) said that a number of references have been received informing that many entities, including Corporates, intend to source Covid relief material from abroad and distribute it freely, availing the IGST exemption under the said Order.

“It may be mentioned that in case any corporate buys it and even gives it for free, such exemption will not be available,” CBIC said. Further it reiterated that it is available when said goods are imported free of cost for the purpose of Covid relief by a State Government or, any entity, relief agency or statutory body, authorised in this regard by any State Government. CBIC is apex policy making body for indirect taxes under the Finance Ministry.

May 3 notification from the Finance Ministry said that the Central Government had received a number of representations from charitable organizations, corporate entities, and other Associations/ entities outside India seeking exemption from IGST on the import of Covid-19 relief material (already exempted from customs duty), donated/received free of cost from outside India for free distribution. Accordingly, the Central Government has has granted exemption from IGST on import of such goods received free of cost for free distribution for covid relief the Ministry had said in a statement. Further, it clarified that as customs duty is already exempt, these imports will not attract any customs duty or IGST.

This exemption will apply till June 30. It would also cover goods already imported but lying uncleared on the date of its issuance of exemption i.e., Monday. The exemption will be subject to few conditions. These includes state government shall appoint a nodal authority in the State for the purpose of this exemption. The nodal authority will authorise any entity, relief agency or statutory body, for free distribution of such Covid-relief material. The said goods can be imported free of cost by a State Government or, any entity/ relief agency/ statutory body, authorized in this regard for free distribution anywhere in India.

In the FAQ, CBIC said that from the notification it is clear that the adhoc exemption order applies only where the importer gets goods free of cost for free distribution. “Other instances are not covered by the exemption order,” it said.

Another question was related with use of imported materials in more than one States and which nodal agency will work. CBIC replied that any ‘relief agency’ authorised by a State can make free distribution of goods so imported anywhere in India. Exemption order only envisages that relief agency should have been authorised by a State and should have obtained a certificate to this effect. So, in the instant case either of the States A or B may authorise the agency and issue the certificate, it clarified.

Published on May 08, 2021

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