NEW DELHI : Despite mounting pressure, the government has rejected calls for giving goods and services tax (GST) exemption to ventilators and other medical equipment, which are key to the fight the coronavirus pandemic, saying such a move will not benefit consumers much, but could bring hardship to domestic producers.
Exempting ventilators, masks, test kits and personal protection gear from GST will burden their domestic producers, who pay taxes on raw material with unusable tax credits, said a government official who asked not to be named. This will add to their cost of production, a burden that imported rival products will not have to bear.
The union government has come under political pressure from opposition parties, particularly the Congress, which has been demanding that equipment and commodities related to the treatment of covid-19 should be free from GST. In the past, federal indirect tax body, the GST Council, had bowed to public and political pressure to exempt sanitary napkins from GST, which had led to domestic producers having to bear the unused input tax credits. These eventually get added to the cost of production and get passed on to consumers in the form of higher price, although the GST rate on it will be zero.
The Congress has been raising the issue of better access to healthcare services and more resources for state governments to deal with the coronavirus pandemic. It has demanded that “all big and small” equipment related to treatment/relief from the pandemic should be GST-exempt.
“In this difficult time of # covid-19, we are constantly demanding from the government that all small and big equipment related to the treatment of this epidemic should be made GST-free. To collect GST on sanitizers, soaps, masks, gloves etc. from the people suffering from poverty is incorrect. We will stand by the #GSTFreeCorona demand,” former Congress president Rahul Gandhi posted in Hindi on Twitter on Monday.
Earlier this month, Maharashtra deputy chief minister Ajit Pawar had also written to Union finance minister Nirmala Sitharaman seeking tax exemptions for some medical equipment used in combating covid-19.-Livemint