Ahead of the crucial GST Council meeting on Saturday, leading tax experts on Friday pitched for lowering the rates on Covid items, even as a temporary measure.
The council would consider exemptions or reductions on vaccines, Covid items and black fungus medicines based on the suggestions of a ministerial panel.
Bimal Jain, chairman of the indirect taxes committee of industry body PHDCCI, said the states may not object to the 5 per cent GST on vaccines as the Centre would procure 75 per cent of the vaccines and supply them to the states.
However, the tax rates on Covid items should be reduced to make it affordable to the patients during the pandemic. He was speaking at a webinar organised by the PHD Chamber of Commerce and Industry (PHDCCI) on GST input tax credit.
The Congress party- and other Opposition-ruled states have been demanding a reduction in taxes but the central government felt the move may not result in tangible gains for people.
Jain pointed to several gaps in the credit system: credit is denied because the supplier has not paid GST. It is not available for goods distributed as sales promotion, which is considered as a gift.
Input tax credit (ITC) is unavailable on CSR expenses and because of matching ITC with GSTR 2A or 2B. “The government must try to simplify the process of availing credit for all businesses,” Jain said.
The input tax credit is a hugely contentious issue complicated by a concertina of rates and exemptions and relaxed reporting requirements for certain categories of companies — mostly small businesses — that slows refunds because of delays in invoice matching.
Sanjay Aggarwal, president of PHD Chamber, said input tax credit was a major matter of concern for taxpayers incurring Covid-19 related expenditure as there are doubts on availing ITC on such expenditure.
“No relaxation has been provided in the time limit for availing ITC as given under Section 16(4) of the Central Goods and Services Tax Act, 2017. The taxpayers can only avail input tax credit for 2020-21 till October 20, 2021,” he said.
