Trade imports of vaccines are currently subject to a 5% Goods and Services Tax (GST), while COVID-19 drugs and oxygen concentrators are subject to a 12% tax. The May 1st notice from the US Treasury Department says that the concentrator will be subject to a 12% fine from IGST. Import oxygen for personal use or as a gift. According to sources, at the next meeting on Friday, the Security Council will make a final decision on this issue.
Tax experts said that the council may decide to exempt such imports from IGST because it has little effect on income and Young’s tax partner Abhishek Jain said that the government has approved the IGST exemption for the free import of oxygen concentrators to mitigate COVID through the state government or agencies authorized by the state government. “The Delhi Supreme Court has beneficially prolonged this IGST personal import exemption as a gift for personal use”. Considering the scale of the pandemic and a life-saving measure, and since the government can ignore tax losses, the government can consider planning.
Rajat Mohan, the senior partner of AMRG & Associates, said that imposing additional tariffs on medical equipment, medicines, and vaccines is totally unethical from government’s side. Mohan also added that there is a need to reduce the price of Covid-related materials and offset the tax on all these imported products so effectively that it will have a direct impact on the entire supply chain.
The opposition party Congress stipulated no goods and services tax on all essential medicines, equipment, and tools needed to treat COVID-19 patients. Earlier government had dismissed the exemption of GST on covid associated units stating that this exemption would cause an escalation in price because the firm cannot equalize the resource tax paid and there is a chance for dual taxation.
The discounted price of covid essential units for personal use is valid until June 30. The IGST tax on imported oxygen generators for commercial use is also subject to a 12% tax. Service provision ratio is 50:50Between the central and the state i.e., CGST & SGST, and the integrated GST(IGST) is used for interstate transportation and import of goods, which are accumulated for the central. It had also been mentioned that Companies can use the fees paid by IGST to obtain credit (input tax credit) when they pay CGST or SGST at the time of actual sales.