FM raises concern over shortfall in GST cess relief

GST Council meet: Wants tax concession for all Covid supplies

Tribune News Service

Chandigarh, May 28

Punjab today raised concern over the shortfall in Goods and Services Tax Compensation Cess for 2021-22, which will lead to a compensation cess shortage for a second year in a row.

Having been “coerced” by the Government of India into accepting the new terms of borrowings to meet the shortfall in GST compensation in mid-2020, Punjab Finance Minister Manpreet Singh Badal, who was representing the state at the 43rd GST Council meeting, said he was dismayed that the Centre was going back on the promise of compensation made to states at the time of GST rollout, which is why the compensation announced was less than last year.

“We need to apply 14 per cent compounding on actual revenue for 2020-21 and calculate the total compensation entitlement,” he said.

During the meet, Finance Minister Manpreet Singh Badal also demanded extension of tax concession on all COVID supplies, especially vaccines and medicines, during the GST Council Meet, held today.

Badal, on behalf of the state government, said everything required for testing, treatment and prevention of the disease should be exempt from the GST.

“Use this massive challenge to upgrade medical preparedness and health infrastructure constrained by the burden of taxes,” he said, adding only general items such as ambulances, capable of commercial exploitation, could be taxed.

It may be mentioned that many goods attract basic customs duty ranging up to 20 per cent and GST up to 18 per cent, besides a social welfare surcharge of 10 per cent and IGST of 2-3 per cent on taxable value.

Badal also took a serious view of a number big decisions being taken by the GST Implementation Committee, while the GST Council had been reduced to a bystander. He said decisions should only be taken by the council. “A Group of Ministers could be formed for raking urgent decisions,” he suggested.

Punjab has also protested taxability on extra neutral alcohol. On the issue of taxability of textiles — another major industry in Punjab — Badal is learnt to have proposed that taxes should be collected at the early stage of the chain from large manufacturers of fibre and yarn, so that downstream industry found little incentive in evading tax.

Bq

Lift burden, upgrade infra

“Use this massive challenge to upgrade medical preparedness and health infrastructure constrained by the burden of taxes”

— Manpreet Singh Badal, punjab fm

Box

Prevailing Goods and Services Tax

18% Protective gear, digital thermometers, lab sanitisers, disinfectants, paper bed sheets, etc

12% Covid test kits, vaccines, ventilators medical oxygen, nebulisers

12-18% Remdesivir, Doxycycline, Ivermectin, Tocilizumab