1-MIN READ

Exempting PPE From GST Will Not Help Producers and Consumers, Say Govt Sources

Image for representation: Reuters

Image for representation: Reuters

Many opposition leaders, including former Congress President Rahul Gandhi have been demanding that PPE be exempted from GST.

The removal of Goods and Services Tax (GST) on Personal Protective Equipment (PPE) like surgical masks, ventilators, testing kits and sanitisers will neither benefit the producer nor the consumer, government sources told Network 18.

Presently, GST applied on sanitisers is 18 per cent, while ventilators and testing kits each have 12 per cent, coveralls have a GST of 12 per cent if the price is over Rs 100 per piece, and 5 per cent if the price is less than Rs 1,000 per piece, and surgical masks have a GST of 5 per cent.

Many opposition leaders, including former Congress President Rahul Gandhi have been demanding that PPE be exempted from GST.

Tax officials pointed out that being a value add tax, GST was collected at each stage of supply chain tax. So even if even if GST on PPE was reduced to zero, the total cost would remain unchanged as the tax would have already been collected along the chain of inputs by the time it came to the final producer. Even assuming GST exemption to PPE, it would only make output GST as zero, but the input tax credit (GST paid on inputs) would get blocked and so would get added to the cost.

So the consumer would not gain from GST exemption, and at the same time, the compliance burden would increase for manufacturer, as he would be required to maintain separate account of inputs, input services and capital goods used for manufacture of PPE (exempted items).

However imports would not suffer from any blocked input tax credit, and so would be cheaper than PPE produced domestically, the officials said. This would then hurt domestic producers, they said.

Next Story
Loading