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GST Council To Meet On May 28; Compensation Shortfall, Rates On COVID Essentials On Agenda

The impact of second wave of the pandemic on GST revenue is likely to be taken into account in the forthcoming GST Council meeting on May 28.

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The GST Council will meet on May 28 and is likely to discuss tax rates on COVID-related drugs, oxygen equipment and vaccines.

The meeting among other things is also likely to discuss the compensation mechanism for states' GST revenue shortfall for the ongoing fiscal which began on April 1.

Finance Minister Nirmala Sitharaman will chair the 43rd GST Council meeting via video conferencing on May 28, 2021.

“The meeting will be attended by MOS Shri @ianuragthakur besides Finance Ministers of States & UTs and Senior officers from Union Government & States,” Office of Nirmala Sitharaman tweeted.

Earlier this month, West Bengal Finance Minister Amit Mitra and Punjab Finance Minister Manpreet Singh Badal had demanded that a virtual GST Council meeting be held.

The meeting of the Council is supposed to take place at least once every quarter of a financial year. However, the panel has not met since October 5 last year.

Congress working president Sonia Gandhi had last month demanded that all life-saving drugs, equipment and instruments required to treat COVID-19 patients must be exempted from GST. Mamata Banerjee's Trinamool Congress has also made a similar demand.

Sitharaman had, however, ruled out exempting COVID vaccines, medicines and oxygen concentrators from GST saying such an exemption will make the lifesaving items costlier for consumers as manufacturers will not be able to offset the taxes paid on inputs.

Currently, domestic supplies and commercial imports of vaccines attract 5 per cent Goods and Services Tax (GST), while COVID drugs and oxygen concentrators attract 12 per cent levy.

The Centre had last fiscal year released Rs 70,000 crore to states on account of GST compensation. This is over and above the Rs 1.10 lakh crore released to states under the special borrowing mechanism to compensate them for shortfall in the GST collection this financial year.

As much as Rs 63,000 crore worth compensation is still due to be paid for 2020-21 fiscal year which ended March 31, 2021.

The impact of second wave of the pandemic on GST revenue is likely to be taken into account in the forthcoming GST Council meeting on May 28.

(PTI)