NEW DELHI: The all-powerful GST Council, chaired by Union finance minister Nirmala Sitharaman, will meet on June 12 to decide on a GST rate cut for several goods related to combating Covid, amid indications that states are no longer interested in pressing for a revision in the levy on vaccines.
The change in states’ posture comes after Prime Minister Narendra Modi’s decision to rework the vaccine policy, with the Centre now procuring 75% of the production, which will be transferred to the states. After protesting on the issue, states seem to have abandoned their opposition since it no longer impacts their purchases. The other recommendations of the group of ministers (GoM) set up by the GST Council will, however, figure on the agenda.
The panel, which submitted its report earlier this week, has recommended a cut in levies for several products, but has refrained from either waiving GST completely or reducing it to a bare minimum, something that the Opposition-led states were demanding.
From oxygen concentrators to medical grade oxygen and testing kits, the panel is said to have recommended a 5% levy as a temporary measure. The demand from some of the states include cutting GST on PPE kits, masks and hand sanitisers.
UP FM Suresh Kumar Khanna, who is also a member of the GoM, had on Wednesday said the state is in favour of cutting taxes on Covid essentials to facilitate patients, but will accept the decision of the GST Council on tax rates.
The Council’s decision to set up a ministerial panel had faced flak from the Opposition, which wanted an immediate cut, and had also called the Centre “heartless”, a charge that Sitharaman suggested was not justified, given that the panel is a permanent body, which had decided to go by a formula of revenue-neutral rates at the time of the GST launch four years ago to protect revenue.
Recent meetings of the Council have witnessed Opposition states joining hands and trying to put the blame on the Centre. While Saturday’s meeting is expected to be largely confined to discussing the report of the GoM, some states are also expected to raise the issue of compensation. They are demanding that the compensation period should be extended by another five years, beyond the July 22 deadline. Some states are also demanding that the borrowing limits need to be raised to 5% of GSDP (gross state domestic product), without any conditions to enable them to raise funds to deal with the impact of cyclones and other natural calamities.
The meeting is also likely to deliberate on Punjab FM Manpreet Badal’s demand for discussion in the GST Council for the need to obtain Council’s approval for decisions taken by the GST Implementation committee, as it does not have the powers to make rules. There is a view among states that the Council’s authority is being eroded and some states are likely to raise the issue forcefully during the meeting.

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