Finance ministry notifies new reduced GST rates on Covid essentials

Representational image.

The finance ministry has notified the new reduced goods and services tax (GST) rates on Covid essentials but remained silent on the rates of the items that are with the stockists.

The reduced rates, which have come into immediate effect, will remain in force till September 30, 2021.

“It is better that the government should clarify for no disputes… stockists should be allowed refund as they have paid higher rates of GST on stocks prior to the latest notification and will be selling at a lower rate,” Bimal Jain, tax expert, said.

Uday Pimprikar, national leader indirect tax, EY LLP, said: “The GST mandates that the stocks need to be sold at a lower rate and the government should clarify to remove ambiguity where it exists.”

The GST Council, chaired by finance minister Nirmala Sitharaman and comprising state ministers, on June 12, had slashed the tax rate on Covid drugs such as Remdesivir and Tocilizumab as well as on medical oxygen, oxygen concentrators and other Covid essentials.

The finance ministry’s revenue department on June 14, notified the lower rates for 18 Covid-related supplies like hand sanitiser, pulse oximeters, BiPAP machine, testing kits, ambulances and temperature check equipment. 

“It remains to be seen how the industry will ensure that the said benefits reach the end users with immediate effect. The goods requires change in MRP to be reflected in the product packaging. This means the benefit will only reach the common public once the MRP on such products is revised to reflect the change. This may not be possible for the stock already lying with the retailers on such short notice,” said Shareen Gupta, partner J. Sagar Associates.

Ranjeet Mahtani, partner, Dhruva Advisors, said in the case of MRP products lying in stock with retailers, the benefit of reduced rates will have to be passed on in the form of discounts or reduction of value. “Alternatively, the MRP will have to be adjusted to reflect the revised GST. For non-MRP products the invoices will have to be at the revised GST rate.”

Smita Singh, partner, Singh & Associates, said though changes in GST rates have been brought forth to reduce the cost of Covid-related treatment, such change is applicable on goods supplied post issuance of notification.

“An important aspect that escaped consideration is regarding treatment of goods already in stock on which MRP has been declared with old GST rate,” she said.

https://www.telegraphindia.com/business/finance-ministry-notifies-new-reduced-gst-rates-on-covid-essentials/cid/1818933

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