As the demand for medical items like ventilators, PPEs, masks, test kits, and sanitizers jumps exponentially, the central government is expected to continue charging Goods and Services Tax (GST) on this equipment. The government has argued that providing any exemption on these items would lead to the blocking of input tax credit (ITC), which in turn will increase the cost of manufacturing and eventually the price for the customers.
Demand from different quarters ignored
The center has been getting demands from a section of people who were demanding the exemptions on GST including ventilators, personal protective equipment (PPEs), masks, test kits and sanitizers which are lifesaving items against COVID-19 treatment. It was argued that the GST exemption will result in a reduction in prices. Earlier this month, Maharashtra Deputy Chief Minister Ajit Pawar wrote a letter to Union Finance Minister Nirmala Sitharaman seeking an exemption on Goods and Services Tax (GST) for some medical equipment used in the fight against COVID-19 outbreak.
As per current rates, the government is levying 12 percent GST on Ventilators, test kits, and PPE (costing more than Rs 1,000 apiece), 5 percent masks and on PPE (costing up to Rs 1,000 a piece) and 18 percent on sanitizers. As per a report by news agency PTI, GST exemption on these items would jeopardize the interest of the industry and further, it would put an additional burden on the customers. The sources argued that in past GST exemption on sanitary napkin also gave rise to a similar situation for local manufacturers.
Moreover, it was further argued that customers won't be benefitted from such exemption on these items and in fact, the manufacturers will have to maintain a separate account of inputs, input services and capital goods used of these items. In case these manufacturers fail to maintain such records, they will have to forego input tax credit on all inputs/ input services used in the manufacture of exempted PPE after applying detailed calculations.