Covid-19 After Mamata seeks tax waivers on Covid meds and equipment, Sitharaman explains how taxation reduces burden on buyers
New Delhi/IBNS: Union Finance Minister Nirmala Sitharaman has emphasised that a minimum 5 per cent tax on vaccines and 12 per cent tax on medicines and oxygen concentrators is necessary to keep their prices low while replying to West Bengal Chief Minister.
"If full exemption from GST (Goods and Services Tax) were given, the domestic producers of these items would be unable to offset taxes paid on their inputs and input services and would pass these on to the end consumers by increasing their price," she explained in a string of 16 tweets.
16/ A 5% GST rate ensures that the manufacturer is able to utilise ITC and in case of overflow of ITC, claim refund.
— Nirmala Sitharaman (@nsitharaman) May 9, 2021
Hence exemption to vaccine from GST would be counterproductive without benefiting the consumer.@ANI @PIB_India @PIBKolkata
Input tax credit is the return the manufacturers can claim on the tax paid on raw materials and services used to make their products, which makes a product cheap.Current rules do not allow a product with zero tax cannot claim this benefit.
The finance minister also pointed out that the Covid-19 related medicines and equipment have been already exempted from import tax and 70 per cent of IGST which goes to the states.
13/ From the GST collected on vaccine, half is earned by the Centre and the other half by the States. Further, 41% of Centre’s collections also get devolved to the States.@ANI @PIB_India @PIBKolkata
— Nirmala Sitharaman (@nsitharaman) May 9, 2021
Sitharaman's response came after Mamata Banerjee in a letter to Prime Minister Narendra Modi asked to waive import duties on Covid-19 related medicines and equipment.
1/ Hon. CM of West Bengal @MamataOfficial has written to the Hon @PMOIndia seeking exemption from GST/Customs duty and other duties and taxes on some items and COVID related drugs.
— Nirmala Sitharaman (@nsitharaman) May 9, 2021
My response is given in the following 15 tweets.@ANI @PIB_India @PIBKolkata pic.twitter.com/YmcZVuL7XO
This was the third letter Banerjee wrote to the Prime Minister on the coronavirus crisis since taking oath as West Bengal Chief Minister on Wednesday.
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