GST on vaccines in interest of manufacturers and citizens, says FM Sitharaman

Responding to West Bengal Chief Minister Mamata Banerjee’s letter to Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman on Sunday said the Centre has already granted exemptions from all duties for COVID-19 related supplies, and the Goods and Services Tax (GST) levied on vaccines is in the interest of manufacturers and citizens.

Earlier today, Banerjee requested the prime minister to waive all forms of taxes and customs duty on equipment and drugs being used to fight the COVID-19 pandemic.

In a series of tweets, Sitharaman said exemption from GST for domestic supplies and commercial import of vaccines, COVID drugs and oxygen concentrators will increase the price of these items.

“If full exemption from GST were given, the domestic producers of these items would be unable to offset taxes paid on their inputs and input services and would pass these on to the end consumers by increasing their price,” the finance minister said, adding that a nominal 5 per cent GST is in the interest of the domestic manufacturer of vaccine and in the interest of the citizens.

“A 5 per cent GST rate ensures that the manufacturer is able to utilise ITC and in case of overflow of ITC, claim refund. Hence exemption to vaccine from GST would be counterproductive without benefiting the consumer,” she added.

Sitharaman also pointed out that states end up receiving almost 70 per cent of the total revenue collected by the Centre through GST.

On Banerjee’s demand for removal of customs duty, IGST and other taxes, the finance minister said the Centre has already provided these exemptions. Business Today