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GST cut on Key Medicines
Shambhavi Sharma / 2021-04-29 12:10:15Introduction
States want the council to consider expanding the GST payout cycle past July 2022 because the economy is still volatile.
States are asking for key Covid drugs like Remdesivir, medicinal grade oxygen in oxygen cylinders, and related supplements to be exempt from the current 12% levy.
The council is expected by law to meet at least once every fifth month, but the lengthy delay this time has caused concern.
T S Singh Deo, Chhattisgarh's health minister, told Business Standard that the state would write to the Centre requesting that Remdesivir and related supplements be exempt from GST. We're seeking a GST exemption on Remdesivir and a few other products. The GST Council, however, must meet in order to do so. A virtual conference, according to Deo, should have taken place.
In the face of a nationwide shortage of the Remdesivir vaccine, Chhattisgarh has placed an order for 90,000 Remdesivir injections worth Rs 14.11 crore with pharma giant Mylan Laboratories. We've placed an order with Mylan Laboratories for 90,000 injections at a cost of Rs 1,400 plus 12 percent GST. According to Deo, approximately 2,000 injections will be administered in two days, accompanied by another 28,000 injections in a week, for a total of 30,000 injections per week.
Economic Angle on cutting GST on Key Medicines
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States should consider expanding the GST payout issue beyond July 2022 in the council, according to Punjab finance minister Manpreet Singh Badal, as long as economic uncertainty persists. By law and practise, the GST Council must meet once a month. The GST device must be fixed now. It cannot be restored until the formative period, which lasts less than five years, is completed.
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States were given a five-year payout after the introduction of the GST in July 2017 to make up for any revenue deficits that could arise as a result of the loss of indirect tax autonomy. Automobiles, tobacco, and aerated drinks are among the items subject to a reimbursement cess in the 28 percent GST bracket.
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Kerala Finance Minister Thomas Isaac said that the council should meet as soon as possible to discuss how states can handle their budgets after the payout cycle has ended. Isaac believes the Centre should convene a meeting and seriously consider raising and extending the payout period beyond July 2022.
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The delay was blamed on elections in key states and the time it took for regimes to form, according to Finance Ministry officials. According to the community, every state must be inculcated in the council. As a result, a senior finance ministry official believes it is best that it happens after new governments have been formed in the poll-bound states.
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The issue of inverted duty structure correction in textiles, apparel, and fertilisers, among other items, is still being discussed. In June of last year, the decision on correction was postponed due to Covid.
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To correct the inverted duty structure, the council had to raise the rate on cell phones and designated sections from 12% to 18%. An inverted obligation structure occurs when the rate on inputs is higher than the rate on the finished output. In addition, the 12 percent and 18 percent slabs will be merged to create a more competitive rate structure.
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The N K Singh-led 15th Finance Commission has suggested simplifying GST into a three-rate structure, with a 5% merit rate, a rate derived by combining 12 and 18 percent, and a 28-30 percent de-merit rate. According to RajyaSabha member and former minister Jairam Ramesh, who recently tweeted that the council has not met in six months, several important decisions affecting the welfare of states and taxpayers are pending.
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