Finance Minister Nirmala Sitharaman defended the government’s decision to tax drugs and equipment related to Covid-19. This was after the Prime Minister of West Bengal, Mamata Banerjee, wrote a letter to the Prime Minister asking for a tax exemption for a multitude of medicines and equipment used in the treatment of the virus.
“… I would ask that these items be exempt from customs and customs duties and other such duties and taxes, in order to remove restrictions on the supply of the above-mentioned drugs and life-saving equipment and contribute to the effective management of the Covid pandemic,” . Items she listed include oxygen bottles, concentrators, Covid-19 drugs, among others.
Sitharaman responded to her twitter account saying the government has already cut taxes on a number of items.
“With effect from May 3, 2021, complete relief from all injections of Remdesivir, Remdesivir API and chemicals for the production of this drug has been made possible,” Sitharaman said. “Also for medical oxygen, equipment used to produce, store and transport oxygen, equipment used to provide oxygen therapy to Covid patients such as oxygen concentrators, ventilators, non-invasive oxygen masks, etc.”
Sitharaman further claimed that part of the revenue collected through the GST goes to the states.
“GST at rates ranging from 5% (for vaccines), 12% (Covid drugs, oxygen concentrators) are applicable to domestic stocks and commercial imports of these items,” she said. “If an integrated GST of HRK 100 is collected on a case, EUR 50 belongs to the Center and the states as the Central GST, ie the State GST. A further 41% of income tax revenues go to the states. So, from the collection of 100 Rs, as much as 70.50 Rs is the share of the states. “
Further, Sitharaman argued that if full tax exemptions are granted, domestic producers will not be able to claim subscription tax.
“If a complete exemption from the tax on supplements were given, domestic producers of these items would not be able to reimburse the tax paid on their inputs and input services and would forward them to end consumers by increasing the price,” she said.