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.
Read more: FinMin sanctions Rs 46,038 crore as states share in taxes for April
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.
“The government should make amendments and treat such supplies as Zero Rated supplies similar to the supplies to special economic zones (SEZs) or export-oriented units (EOUs),” CMA Mallikarjuna Gupta told ETV Bharat.
“In this way, the supplier/manufacture can take Input Tax Credit and at the same time make these products more affordable,” he said.
He found support from Pritam Mahure, who has authored several books on service tax and GST such as GST Revised Model Law, Global Vat and How To Be Future Proof.
“The only way to reduce the cost of such equipment is to make them 'zero rated' products and services, it means to treat them at par with exports for the purposes of GST,” Pritam Mahure told ETV Bharat.
He, however, added that it looked unlikely at present.
Mixing politics with economics!
Pritam Mahure said opposition parties are well represented in GST Council and can raise their issues there. GST Council, a composite body of both Union and States is the apex body to decide the GST related issues including its rate and administration in the country.
“Opposition parties are very well aware of the functioning of GST and they are very well represented there. GST Council is the right platform for raising such issues,” he told ETV Bharat.
Price of sanitisers, masks already capped
Experts also point out that the prices of sanitisers and masks have already been capped in the country.
To prevent the hoarding and black-marketing of Covid19 related products, the Union government has already notified the maximum price that can be charged for sanitisers and masks.
On March 20, the government has brought sanitisers and masks under the essential commodities act and fixed their maximum retail prices.
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कोरोना वायरस #COVID19 के फैलने के बाद से बाजार में विभिन्न फेस मास्क, इसके निर्माण में लगने वाली सामग्री और हैंड सेनिटाइजर की कीमतों में बेतहाशा वृद्धि देखी गई है। सरकार ने इसे गंभीरता से लेते हुए इनकी कीमतें तय कर दी हैं। 1/3 @drharshvardhan @narendramodi #IndiaFightsCorona
— Ram Vilas Paswan (@irvpaswan) March 20, 2020 " class="align-text-top noRightClick twitterSection" data="
">कोरोना वायरस #COVID19 के फैलने के बाद से बाजार में विभिन्न फेस मास्क, इसके निर्माण में लगने वाली सामग्री और हैंड सेनिटाइजर की कीमतों में बेतहाशा वृद्धि देखी गई है। सरकार ने इसे गंभीरता से लेते हुए इनकी कीमतें तय कर दी हैं। 1/3 @drharshvardhan @narendramodi #IndiaFightsCorona
— Ram Vilas Paswan (@irvpaswan) March 20, 2020कोरोना वायरस #COVID19 के फैलने के बाद से बाजार में विभिन्न फेस मास्क, इसके निर्माण में लगने वाली सामग्री और हैंड सेनिटाइजर की कीमतों में बेतहाशा वृद्धि देखी गई है। सरकार ने इसे गंभीरता से लेते हुए इनकी कीमतें तय कर दी हैं। 1/3 @drharshvardhan @narendramodi #IndiaFightsCorona
— Ram Vilas Paswan (@irvpaswan) March 20, 2020
While a 200-milliliter bottle of sanitiser cannot be sold above Rs 100, the maximum retail price of two-ply and three-ply masks has been fixed at Rs 8 and Rs 10 respectively.
(Article by Krishnanand Tripathi)
