New Delhi: Rahul Gandhi’s demand for completely exempting soaps, sanitisers, masks, and gloves from GST will make these products even more expensive as the suppliers will not be able to claim the input tax credit (ITC), say two tax experts who have done extensive work on GST.
In a tweet, Rahul Gandhi today said: In this difficult time of Covid19, we have been relentlessly demanding the government to exempt all the products from GST that have been used in the treatment or prevention of the pandemic.
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#Covid19 के इस मुश्किल वक्त में हम लगातार सरकार से माँग कर रहे हैं कि इस महामारी के उपचार से जुड़े सभी छोटे-बड़े उपकरण GST मुक्त किए जाएँ।बीमारी और ग़रीबी से जूझती जनता से सैनीटाईज़र, साबुन, मास्क, दस्ताने आदि पर GST वसूलना ग़लत है। #GSTFreeCorona माँग पर हम डटे रहेंगे। pic.twitter.com/iXLkw7lMxM
— Rahul Gandhi (@RahulGandhi) April 20, 2020 " class="align-text-top noRightClick twitterSection" data="
">#Covid19 के इस मुश्किल वक्त में हम लगातार सरकार से माँग कर रहे हैं कि इस महामारी के उपचार से जुड़े सभी छोटे-बड़े उपकरण GST मुक्त किए जाएँ।बीमारी और ग़रीबी से जूझती जनता से सैनीटाईज़र, साबुन, मास्क, दस्ताने आदि पर GST वसूलना ग़लत है। #GSTFreeCorona माँग पर हम डटे रहेंगे। pic.twitter.com/iXLkw7lMxM
— Rahul Gandhi (@RahulGandhi) April 20, 2020#Covid19 के इस मुश्किल वक्त में हम लगातार सरकार से माँग कर रहे हैं कि इस महामारी के उपचार से जुड़े सभी छोटे-बड़े उपकरण GST मुक्त किए जाएँ।बीमारी और ग़रीबी से जूझती जनता से सैनीटाईज़र, साबुन, मास्क, दस्ताने आदि पर GST वसूलना ग़लत है। #GSTFreeCorona माँग पर हम डटे रहेंगे। pic.twitter.com/iXLkw7lMxM
— Rahul Gandhi (@RahulGandhi) April 20, 2020
“It's wrong to collect GST on sanitisers, soaps, masks, and gloves, etc. from the public that is struggling with the disease and poverty,” said Rahul Gandhi.
“We will continue to press for our demand of #GSTFreeCorona,” added the Congress leader.
However, GST experts differ from Rahul Gandhi’s policy prescription. They point out that exempting a product from GST will mean that the suppliers will not be able to claim Input Tax Credit.
“Exemption actually leads to an increase in the basic cost of the exempted goods as the supplier will not be able to claim the input tax credit,” said Pritam Mahure, a practicing Chartered Accountant who has written several books on GST.
“Given this, exemption is not preferable for the specified medical equipments,” he told ETV Bharat.
Input Tax Credit is an inbuilt mechanism under the GST system which has been devised to prevent the cascading of taxes. In other words, whatever taxes are being paid by suppliers during different stages of production are taken into account and if the taxes already paid exceed the applicable GST rate on a product then the last supplier or service provider in the supply chain is entitled to refund of the excess amount.
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However, if the taxes already paid are less than the applicable GST rate then the last person or entity in the supply chain is only required to pay the difference to the government.
“If GST is exempted on the medication used for COVID treatment then it will deprive the input tax credit and make them expensive,” said CMA Mallikarjuna Gupta, who has authored an e-book on GST: Good and Simple Tax: GST and You.
How the cost of COVID19 related products can be reduced?
Both the tax experts told ETV Bharat that the correct approach will be to treat these products at par with exports.
