VASCO
Panchayats Minister Mauvin Godinho on Sunday explained that GST on any product can never be made zero per cent because it will not allow manufacturers to claim the input tax credit and the prices of products could go higher in the bargain.
Godinho speaking to reporters after the Tika Utsav at Bogmalo said the government had been very careful while calculating the GST and had reduced GST on many Covid related products.
"We had the 44th GST Council meeting on Saturday and all Covid related products have reduced GST and important products have been exempted from GST till September 20. GST from many other products have been reduced from 28 per cent to 12 per cent like in the case of ambulances and all other products have been brought from 18 per cent and 12 per cent to 5 per cent," said Godinho.
"There was a misunderstanding that why GST cannot be made zero but it can never become zero because manufacturers will not be able to get back the input tax credit (ITC) and instead of becoming cheaper, the manufacturers will have to load the ITC to the prices and under this mechanism prices will go higher on the contrary. Since it is Covid related and we have to get the people out of the pandemic, we have priced it in the GST council in such a way that the proper relief and benefit comes to the end customer or the patients who receive it," said Godinho.
Godinho said that there was another issue on why the GST on vaccines could not be made zero.
"When 75 per cent vaccines are going to be purchased by the centre and given to states and the tax will go back to the government, it makes no sense lowering it. On the contrary, of the 5 per cent GST levied on vaccines, 2.5 per cent will go back to the state and we have calculated that in the end, 70 per cent of the entire 5 per cent tax collected will be given to the states again as their share from the tax collected. GST can never be made zero because the ITC claim is the main issue which will then create further problem in the entire chain," said Godinho.
