Shashi Tharoor writes to FM, seeks customs, GST tax exemption for all diagnostic, protective equipment used for COVID-19

Senior Congress leader Shashi Tharoor urged Finance Minister Nirmala Sitharaman on Monday to give a comprehensive customs and GST tax exemption on all diagnostic and protective equipment currently being employed by healthcare professionals in the fight against the COVID-19 pandemic.

In a letter to Sitharaman, Tharoor said at present a number of tax rates are being charged, including on critical equipment such as Personal Protection Equipment (PPE), infrared thermometers, thermal cameras or scanners, rapid testing devices, protective masks and even sanitisers.

"For instance, during my recent procurement of 250 infrared thermometers for my constituency of Thiruvananthapuram, using the MPLAD funds that were previously under my disposal, a considerable sum of Rs 5. 08 lakhs was levied in taxes (comprising of Customs Duty of Rs 1.64 lakhs, IGST of 3.27 lakhs and a social welfare cess of Rs 16, 415)," Tharoor said.

He also pointed out that for procuring 3,000 RT-PCR test kits for his constituency, the consignment was charged with a 12 per cent GST rate.

"It is also my understanding that the procurement of PPE kits, which are essential in offering a layer of protection to healthcare professionals and allied medical supports staff, will attract a GST of either 5 per cent or 12 per cent depending on the cost of individual components within these kits," he said.

At a time when the nation is united in a common endeavour to tackle the COVID-19 pandemic, and many stakeholders are scrambling to procure these essential items from all quarters including overseas manufacturers, the current tax slabs that have been fixed offer a financial obstacle that could be done away with, Tharoor said.

Though Parliamentarians can unfortunately no longer procure critical equipment since the funds at their disposal have been appropriated by the central government, other civil society organisations and philanthropic bodies have been generously doing their bit to augment the availability of these items, he said.

The current tax rates that they will have to cover appears to be an unwise financial burden that could disincentivise additional procurements, he said. .

In order for such an exemption to be beneficial for the customer, it is also essential that the government looks into the loss of input tax credits that would hit manufacturers and explore options through which manufacturers can be reimbursed on the same basis as if GST had been paid, he suggested in his letter.

The lost GST revenue would serve as a form of government contribution or subsidy for the fight against COVID-19, he said.

"I believe that the current taxation rates that are being levied on life-saving equipment must strongly be reconsidered and a well-thought exemption must be announced at the earliest," Tharoor said.

"While the government has rightly exempted some of the aforementioned equipment from basic customs duty, a comprehensive customs and GST related exemption on all such equipment would certainly be beneficial and worth considering," he said.

If implemented retrospectively, it would also help Parliamentarians to obtain additional equipment for their respective constituencies by redirecting the sum allocated for taxes that they would have previously spent from the erstwhile MPLAD funds at their disposal, Tharoor added.

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