Covid-19 Vaccine chargeable to GST tax or not ?

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Since last year or so, the whole country is going through tumultuous patches for society as a whole. Present second wave of COVID-19 has put the resources of country at greater strain wherein the entire humanity is struggling to keep their hope float leave alone the prospects of future. The problem is increased manifolds in view of enormous population requiring an equal or in fact herculean effort to provide the relief to sheer number of people infected by the strain. In this article, we will discuss on Covid-19 Vaccine chargeable to GST.

Covid-19 Vaccine chargeable to GST

The Government should be saluted for bringing down costs of imports for COVID related goods, varying from medicines to oxygen concentrators and other devices, by way of custom duty exemption notification. Withal, as rightly pointed out the by health experts around the globe, the cure-all for India, in so far as COVID 19 is concerned, lies in vaccination of the entire population.

As has been the direction and rightly so, policies are centred around the vulnerable population of the country while simultaneously assuring that the vaccine should reach entire population soon and in affordable manner. To ensure distribution at effective pricing, Indian government has petitioned to World Trade Organisation (WTO) that patents on vaccinations and other Covid similar items should be waived.

Within the country, a debate has started to exempt the vaccines from GST with petition coming from Chief Ministers, political parties to various NGO’s/ social agencies. While State Governments are favouring for NIL rate of GST i.e. detailed exemption to vaccines, FM in its reply explained the perils of exemptions in terms of reduced input tax credits (‘ITC’) to manufacturer indirectly leading to increased costs of vaccines to absolute consumers.

Further Notification by Central Government

Additionally, it is a common knowledge that the burden of indirect taxes is borne by the ultimate consumer and indirect taxes has inclination to improve inflation by increasing prices at end consumers in line with boost in rate of indirect taxes. Intermediate manufacturing or supply chain passes tax burden on value-add basis as it avails ITC of GST paid by its suppliers.

Once the supplied are established as deemed exports, GST framework (with elaborative procedures) furnishes further benefits to supplier and / or recipient of such supplies in form of GST Refunds. Thus, deemed exports concept ensures goods manufactured in India and supplied to specified individuals would result in zero / lesser tax burden.

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