The BJP-ruled Uttar Pradesh government is in favour of reducing the Goods and Services Tax (GST) levied on COVID-19 essentials to minimise the costs borne by people to cope with the pandemic, State Finance Minister Suresh Kumar Khanna said on Wednesday.
The GST Council, that met on May 28, had formed a Ministerial group to review demands for slashing the tax rates or exempting COVID-19 supplies from the GST regime. Mr. Khanna was part of the Group of Ministers (GoM) that submitted its report to Finance Minister Nirmala Sitharaman this week.
“The Uttar Pradesh Government is in favour of reducing taxes in order to reduce the COVID-19 treatment costs for patients,” Mr. Khanna said. He was responding to a query on the possibility of levying a 0.1% GST on COVID-19 material ranging from vaccines (currently taxed at 5%) and drugs, oxygen concentrators and cylinders that are taxed at 12% or 18%.
Ms. Sitharaman had given the GoM just ten days to firm up its views ‘so that if there are any further reductions that need to be done, (they) will be done’. However, no date has been set for the Council to take up the GoM’s report yet.
Mr Khanna also asserted the State had not raised taxes on petroleum products, similar to other States, despite the fiscal difficulties posed by the pandemic. On States’ GST compensation dues, he said U.P. had no pending dues from last year.
While the Centre has announced a ₹1.58-lakh crore borrowing plan to meet States’ GST compensation dues this year, rating agency ICRA had estimated that ₹97,700 crore of States’ dues remain pending since last year and have to be paid this year, for which the funding options are unclear.
