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.
#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
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).
So @RahulGandhi had demanded removal of #GST on PPE kits!But manufacturers of these kits themselves don’t want any exemption/waiver!Everyone is standing with Modi govt in this pandemic & contributing in their own ways - can we expect Rahul to do that too?#IndiaFightsCorona https://t.co/M15QTQeNMA pic.twitter.com/Pffa7QieVP— Know The Nation (@knowthenation) April 22, 2020
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.