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Merger of GST slabs to take time, Council to discuss tax on vaccines: Report

Topics of priority at the GST meet on May 28 would include discussion on GST compensation mechanism for FY22

May 25, 2021 / 10:18 AM IST
Discussions to extend the GST compensation cess levied on items such as cars are also on.

Discussions to extend the GST compensation cess levied on items such as cars are also on.

Planned merger of the 12 percent and 18 percent goods and services (GST) taxes into a universal slab rate is likely to be delayed, sources told Mint.

As per the report, the plan to merge the slabs is “under construction for several months” and would require a “change in design of the GST structure itself and impact some goods”, one state government source said.

Moneycontrol could not independently verify the report.

Three sources told the paper that talks between state governments and the Centre are on, and discussions to extend the GST compensation cess levied on items such as cars are also on.

Notably, the new merged rate is expected to be between 12-18 percent and could increase tax burden on items currently charged 12 percent, while reducing burden on those in the 18 percent range.


COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Likely items to be impacted include processed food, medical grade oxygen and medical grade equipment, it added.

The matter is expected to be among the priority discussions during the GST Council meeting on May 28, amid the ongoing COVID-19 situation in India.

There are also expectations that the GST Council will set rates for COVID-19 vaccines during the meeting. One of the sources said that the meeting’s agenda will be ready by May 25 and this meeting is likely to be a lengthy affair, it added.

Also Read | Keep COVID-19 vaccines out of the GST purview

Experts feel there is “need for clarity” on rate cuts on vaccines and availability of input tax credit on donated medical supplies or supplies used for personal medical use.

GST exemption on vaccines has been broached by West Bengal, Punjab and Odisha, but Finance Minister Nirmala Sitharaman had explained that a full exemption would result in vaccine manufacturers passing on their input cost to end consumers through increased retail price.

Experts however pointed out that zero-rating GST instead of exemption could circumvent this issue and allow manufacturers to claim refunds for taxes on inputs.

Also Read | GST exemptions on COVID-19 supplies: FMs response draws fault lines ahead of GST Council Meeting

Meanwhile, other topics of priority at the meet would include discussion on GST compensation mechanism for FY22 – specifically if the borrowing scheme instituted last year to meet states’ GST compensation is to be continued,

The Finance Ministry did not respond to queries, the report added.
Moneycontrol News
first published: May 25, 2021 10:18 am

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