Covid equipment subjected to 18% GST

According to a tax judgement, unless materials and equipment are specially developed for the exclusive purpose of Covid immunisation, they should be taxed more. According to tax experts, this is likely to raise the Goods and Services Tax (GST) on equipment used in Covid immunisation programmes.

The Uttar Pradesh Authority for Advance Ruling (AAR) ruled that the manufacture of cold chain equipment used in vaccination and immunisation programmes for shipping vaccines, specimens, and blood samples should be subject to 18 percent GST.

“The judgement prioritises the product’s composition over its usage or consumption by the dealer and the customer. One may argue that composition is not the only criterion utilised to establish categorization, but rather one of several ” Harpreet Singh, partner, Indirect Tax at KPMG in India, agreed.

According to the judgement, not all equipment can be classed as medical or surgical instruments and apparatus, according to the description of vaccine carrier and vaccine cold box on the UNICEF website. The judgement, released in December, stated that all equipment should be subject to the same GST rates unless explicitly developed for the exclusive purpose of Covid immunisation. “With Covid vaccines being of significant societal relevance at the moment, the higher rate of 18 percent GST on vaccine carriers may increase the price in the hands of the end customer if the firms opt to pass on the cost,” Singh added.

According to the AAR, “the UNICEF has also treated the same as an insulated container, therefore holding that the subject items are correctly classifiable.” Companies have encountered many GST issues as a result of the Covid epidemic.