Uttar Pradesh favours GST cut on Covid-19 medicines, says minister

Many oppositions ruled states are seeking zero-rating or 0.1% GST on Covid related essentials.

The Bharatiya Janata Party-ruled Uttar Pradesh government is in favour of a reduction in goods and service tax (GST) rates on Covid-19 medicines and essentials to give relief to patients, the state’s finance minister Suresh Kumar Khanna said on Wednesday.

Khanna is one of the members of the group of ministers (GOM) led by Meghalaya chief minister Conrad Sangma on GST relief on Covid medicines/materials. The GoM is learnt to have recommended reduction of the GST rate temporarily to 5% for most the Covid medicines and materials except vaccines. The GoM’s recommendations will be considered in the next GST Council meeting.

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Many oppositions ruled states are seeking zero-rating or 0.1% GST on Covid-related essentials.

“The UP government is in favour of a reduction in tax rates…we want to help patients,” Khanna said, adding that the state would abide by the GST Council decision in this regard.

With the second wave of Covid-19 affecting people and their livelihoods, the northern state on Wednesday transferred `1,000 each to 23 lakh labourers or `230 crore in total, Khanna said. The state government had also transferred `1,000 each to 30 lakh labourers in the first wave of Covid-19 pandemic in FY21.

“We are trying to give purchasing power to people. We have not closed down any industry even during the second wave of Covid,” the minister said.

He admitted that the second wave of Covid will have some impact on the tax revenues of the state in FY22. Unlike many other states, the minister said, the state has not raised VAT rates on petrol and diesel to raise additional resources to fight Covid. Covid pandemic hit the states’ revenues hard in FY21 with the receipts adding up to only 66% of the targeted Rs 4.2 lakh crore, according to CAG data. The gap in resources forced the state to cut capex by 37% from the budget target of `81,000 crore in FY21.

After the states were allowed to vaccinate people in the age bracket of 18-44 from May 1, the state government had procured 50 lakh vaccines worth `150 crore at a price of `300/dose. Of these, around 36 lakh doses of vaccines have already been administered. On Monday, the union government has decided to bear all expenses for vaccination of people aged 18+, giving some relief to states on the expenditure front.

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