Govt's new covid vaccine policy resolves states GST grievances
The central government’s decision to procure vaccines and supply them to states free of cost from 21 June has provided relief to states. This comes against the backdrop of governments of many states not ruled by the BJP has raised grievances over the 5% GST that they had to pay on all vaccines till now.
Some of this tax liability now falls on the Centre as it has announced that it will now procure 75% of the covid-19 vaccines produced domestically. At present, states have to procure 25% of covid-19 vaccines produced domestically, with the private sector taking 25%, and the Centre procuring the remaining 50%.
Vaccines will be free of charge for all above 18 years of age. There shall be an increased supply of vaccine too," Union finance minister Nirmala Sitharaman tweeted on Monday night.
States are now unlikely to have any objections on the tax rate applicable on vaccines. In the case of a few other items such as medical oxygen, oxygen concentrators, pulse oximeters, and covid testing kits, the Centre has no objection to lowering the tax rate from 12% to 5% temporarily, said a person privy to discussions in the government, requesting anonymity. A decision on these is expected shortly from the GST Council.
With the changed vaccination policy, states’ appeal for GST relief on covid vaccines remains resolved and the only category left out is people getting vaccinated through the private sector," said Abhishek Jain, tax partner, EY.
