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GST on COVID Related Items 2021- Rate, ITC, HSN code & exemption

With the global outbreak of COVID 19, demand for medical supplies such as sanitizers, gloves, oxygen cylinders, medicines, ventilators, disposable face masks, personal protective equipment (PPE), and test kits has skyrocketed. These goods are now important commodities for preserving social distance and good hygiene. Since such products are so essential in the battle against COVID-19, everyone is looking for GST rates, HSN codes, ITC availability, exemption information, and manufacturing aspects on these products.

The rate of GST on hand sanitizers has been a source of debate for some time. However, a specific HSN code for its classification has been retained by many advance rulings and a letter from the Director General of GST Intelligence.

In addition, the Ministry of Finance recently stated that the GST prices on masks and hand sanitizers would not be changed or reduced. Since the inputs used often attract an 18% GST rate, any decrease in the GST rate on hand sanitizers from 18% would result in an inverted tax structure.

GST on PPE Kits:

➢PPE Kits made of Non-Woven Textiles attract GST rate of 5% and the HSN Code is 6210/6307* if sale value is up to Rs.1,000/-and if the value exceeds Rs.1,000/- the GST rate on PPE Kits is 12% and HSN Code is 6210/6307*.

➢The Central Government has provided exemption from Basic Customs Duty and Cess on the import of these products in light of the Covid-19 situation.

Read Also: FM Sitharaman replied to Mamata Banerjee demand to Exempt Oxygen Tanks, Covid Medicines

 

GST on Sanitizers & Gloves:

➢ Sanitizers and other disinfectants attract 18% GST rate and the HSN Code is 3808*. Whereas Surgical Rubber Gloves attract GST at the rate of 18% and HSN Code is 4015*.

➢Expenses for sanitising and washing the premises/ building will be eligible for ITC. ITC will be allowed on the basis of health care offered under section 17(5)(b) of the GST in situations where credit is expressly used for employers, personnel, or staff.

GST on MASKS:

➢ Gas Masks with Replaceable Filter and Mechanical Parts attract GST rate of 12% and HSN Code is 9020*

➢ Mask (Fabric) without Replaceable Filter and Mechanical Parts, including Surgical Masks made of Non- Woven Textiles attract GST at the rate 5% and HSN Code is 6307*.

➢ Importers pay no custom duty on masks, but those who make them in India must pay GST at rates ranging from 5% to 12%.

GST on Oxygen cylinders, concentrators: 

➢ The tax structure on medical-grade oxygen and the equipment used to transport and use it, like everything else in India, is complicated.

➢ Medical-grade oxygen is subject to a 12% GST. A recent Supreme Court petition demands that the government exclude oxygen from GST, as well as the lifting of GST on medicines such as Remdesivir, Tocilizumab, and Favipiravir.

➢ Oxygen concentrators for personal use were subject to a 28% GST, the highest rate available. However, the Centre announced recently that the GST on oxygen concentrators for personal use will be reduced to 12% for two months till June 30 ,2021 .

➢ The Centre also exempted the import of oxygen concentrators, cylinders, and other medical equipment from customs duties last week. These products were also removed from the integrated GST (IGST) on May 3.

GST on Ambulance:

➢ An ambulance will cost anywhere between Rs 10 lakh and Rs 50 lakh, depending on the vehicle's company and model, as well as the amount of medical equipment it transports. A vehicle equipped as an ambulance is subject to a 28% GST rate.

➢Although there is a GST on ambulance purchases in this country, there is no GST  on ambulance services.

GST on Ventilators:

➢ A 12% GST is applied to ventilators and artificial respiration systems.

➢ After the outbreak of COVID-19, there have been proposals for either lowering or eliminating the GST on ventilators. It isn't over yet.

➢ Imported ventilators are no longer subject to import duties or IGST.

 

GST on Crucial drugs: 

➢ Drugs and medicines intended for personal use are subject to 12% GST Rate. Though drugs like Remdesivir, Tocilizumab, Favipiravir, and others are now excluded from customs duties and IGST, the GST they will incur if manufactured in India is still unclear.

➢ A petition has been filed in the Supreme Court seeking GST Exemption for Covid releated drugs.

GST Input Tax Credit (ITC) Aspect:

Health products used in course of business or for employee benefit may be taken as an input tax credit (ITC), but credit for donations of such products is not available.

Items

ITC

(if used for Business)

ITC

(for Donations)

Masks

Yes

No

Sanitizers

Yes

No

Gloves

Yes

No

PPE Kits

Yes

No

 

Manufacturing Aspect:

➢COVID-19 goods should be exempt from GST, according to taxpayers. The government believes that exempting such products from GST would result in blocked ITC, raising manufacturing costs and driving up consumer prices.

➢Many  of these goods were excluded from basic customs duty and cess by the government. Domestic producers may suffer as a result of these exemptions, but customers will be unaffected by the MRP. Indian manufacturers, on the other hand, would have to balance their manufacturing costs, distribution costs, and profit margins.

Note: HSN codes may vary depending on the description  of goods or services.

 

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