Tamil Nadu on Friday urged the Goods and Services Tax (GST) Council to levy a zero rate on COVID-19 vaccines, Remdesivir, Tocilizumab and other essentials purchased by the State government and agencies at least for a temporary period.
In his maiden speech at the 43rd GST Council meeting held virtually, Finance Minister Palanivel Thiaga Rajan said, “This will ensure that the cost of these essential items is reduced significantly, without the suppliers having to absorb any reversal of input tax credit. I am confident that these legal issues [in facilitating zero rating] can be overcome through legislation or ordinance once we reach a consensus.”
On the meeting agenda, he said the State expected nothing more than a marginal growth at the best and a significant negative growth at the worst. He requested the GST Council to consider making arrangements for fully compensating the States for the gap arising during 2021-22 between the protected revenue and the actual expected revenue.
“[It could be] either by means of bridge funding by the Government of andar bahar rules or by its open market debt arrangement. Further, considering the long-term effects of COVID-19, it would also be appropriate to take a decision to extend the compensation arrangement beyond July 1, 2022,” he said.
Tamil Nadu supported the proposal for extension of key IT application development projects till March 31, 2022, and welcomed the proposal to encourage the deputation of State officers to the GSTN with the intention of enrolling all stakeholders in the organisation.
It also welcomed the proposed reduction in the maximum late fee for the belated filing of returns as recommended by the Law Committee. “However, considering the present pandemic situation, the period of compliance may be extended to September 30, 2021, instead of August 31,” the Minister said.
The State government also supported the proposal for a provision relating to the filing of annual return with self-certification of the reconciliation statement by taxpayers themselves and the proposed amendments to the return-related provisions in the GST Act. It extended in-principle support to the quarterly return and quarterly payment proposed to replace the quarterly return with monthly payment.
As for the recommendations of the Fitment Committee, he said Tamil Nadu supported the recommendations for grant of exemption relating to COVID-19 like the ad hoc IGST exemption for specified imported goods donated for COVID-19 relief and reduction in the rate of tax on medical-grade oxygen, oxygen concentrator/generator, pulse oximeter and testing kits.
“We also agree with the recommendations on a reduction in the rate of tax on diethylcarbamazine tablet supplied to WHO, andar bahar rules by SEZ unit and ship repairs from 18% to 5% and a proposed clarification on certain goods and services, including the extension of the benefit of exemption to anganwadis,” he said.
Tamil Nadu agreed with the recommendation on the petition seeking abolition of tax on disability aids and equipment.
As for the Fitment Committee’s proposal for correction of the inverted rate structure on textiles and footwear, Mr. Rajan said the State was for deferring it for the next meeting owing to the pandemic. In view of the lack of consensus, the issue of Extra Neutral Alcohol taxability might also be deferred, he said.