Tax on jabs by hospitals to be in focus at GST council meet -India News Cart

Tax on coronavirus vaccines procured by private hospitals is set to figure prominently in discussions of the Goods and Services Tax (GST) Council, which will meet on Saturday to consider tax relief on medical supplies for Covid management.

Consumers will have to bear the tax on Covid vaccines to be procured by private hospitals unless this is removed. This needs to be addressed in the public interest, said an official with a state government.

A part of states’ grievance about the 5% GST burden on vaccines directly procured by them got resolved with the Centre agreeing to supply three-fourth of all vaccines made in India to them from June 21. While announcing the revised vaccination policy on Monday, PM Modi said no state will have to spend anything on the vaccine. The tax on private procurement of vaccines remains an issue to be addressed.

GST is a tax on consumption based on the product’s classification, not based on who supplies to the ultimate consumer, said the official. “Besides, it is not that all those who go to private hospitals are rich. It is a once-in-a-century health crisis that warrants tax relief,” said the official.

Another argument that figured in earlier discussions among policymakers was the fear of profiteering by private players, but the recent announcement of a price ceiling on vaccines has resolved the issue. The Centre has fixed the maximum price that can be charged by the manufacturer and the service charge that can be levied by hospitals.

Profiteering is the industry practice of businesses raising the price to the consumer whenever the Centre lowered GST rate—a headache for policymakers on items that are outside controls.

The Council is expected to consider the recommendations of a group of ministers set up to look into demands for tax relief on medical supplies.

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