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gst: Opposition-ruled states likely to maintain demand of zero-rate GST on Covid-19 vaccines

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AgenciesThe GST Council is expected to meet again to take a call on whether the GST on vaccines would be lowered from 5%, after the group of ministers (GoM) constituted to look into the reduction of rates referred the matter back to the Council.Opposition-ruled states are likely to maintain their demand of zero rating of Covid-19 vaccines under the Goods and Services Tax despite the Centre having announced a centralised procurement plan.

Senior officials in some of the states said the demand of exempting GST, levied at 5%, has been made to the GST Council to give the benefit to people amid the second Covid wave.

“Vaccine should be made zero-rated, it is in the interest of the common man,” a senior official belonging to one of the southern states said.

Another top official in one of the northern states said the states may keep their stand intact, even though the government would earn from GST on the vaccine price and pass part of the revenue to states.

“It would be the case of the government paying itself,” the official said. “The states will meet again before the GST Council meets to take a final call on the issue,” he added.

The GST Council is expected to meet again to take a call on whether the GST on vaccines would be lowered from 5%, after the group of ministers (GoM) constituted to look into the reduction of rates referred the matter back to the Council.

The government on Monday announced that the Centre will procure the Covid vaccines from manufacturers and provide them free of cost to all states for inoculation of people above 18 years of age, from June 21.

The Centre would procure 75% of the manufacturers’ capacity while private sector hospitals can procure the remaining 25%. Central government would bear the cost of paying GST on this and pay half to states. Further, 41% of the overall tax collection of the Centre also goes to states.

Private sector hospitals have been allowed to charge a maximum of Rs 150 above the price of the vaccine after GST. The tax revenue collected from this segment will also be split between the Centre and states.

“States will benefit to the extent of their share out of GST that the Centre pays up when it procures the vaccine and supplies to states free, so a zero-rate tax would only dent this revenue of the states,” said Abhishek Jain, tax partner at EY.

He added that states’ demand of zero rating may now be limited only to paid vaccination at private hospitals, which is the only scenario that the GST would be a cost to the citizens.

Source: indiatimes.com

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