State seeks levying Covid cess on power, pharma sectors

ITANAGAR, 29 May: Arunachal has supported the Sikkim government’s proposal to seek concurrence for levying of Covid cess on power and pharmaceutical sectors in the states.

Attending the 43rd GST Council meeting, which was held in the virtual mode on Friday, Arunachal Deputy Chief Minister (DCM) Chowna Mein said that the state supports the proposal of Sikkim, and that small states like Arunachal may also be allowed to levy cess as it is also a financially crunched state and has to depend on the Centre for 90 percent of its finances.

Goa also supported the proposal.

Union Finance Minister Nirmala Sitharaman, who chaired the meeting, assured to form a group of ministers (GoM), as had been done earlier to allow flood-hit Kerala to levy cess.

On the proposal of the Fitment Committee to reduce the GST on Covid-related essentials like medical oxygen, oxygen concentrators and other oxygen generating equipments, pulse oximeters and testing kits from 12 percent to 5 percent till 31 June, no consensus was reached on the reduction of tax rates.

Later, the decision over tax rates on Covid-related essentials was referred to a GoM, which will submit its report within eight days.

Till then, the rates proposed by the Fitment Committee will be applicable and the concession has been extended till 31 August.

On the issue of applicability of GST on extra neutral alcohol (ENA), the DCM said that ENA should be kept out of the ambit of the GST as it would result in loss of revenue, as the state is presently levying VAT on ENA.

“Moreover, power of taxing alcoholic beverages for human consumption is vested with state and ENA is primary an input for manufacture of alcoholic beverages for human consumption. Further, such a move will hamper developmental activities as the state is already facing a financial crunch due to limited resources,” he said.

To drive his point home, Mein said: “Arunachal Pradesh is geographically a big state but sparsely populated, and it is challenging to reach out to the remote parts of the state for any developmental works without the state’s own resources as central fund is meant for specific schemes or projects, and therefore the state humbly requests to maintain status quo on ENA.”

Most of the states were of the view that taxation of ENA be left to the states. The participants agreed to maintain the status quo for the time being.

Mein also said that “Arunachal Pradesh agrees in principle the decisions of the GST Implementation Committee, like reduction in late fee for non-filing of Form GSTR-4 for the quarterly tax periods from July 2017 to March 2019 and Form GSTR 10 – one-time amnesty to clean up pendency in return filing in GST regime, extension of due date for filing annual return for financial year 2018-19, enabling provision for power to exempt issuance of e-invoice on the recommendation of the council and related issues, rule amendments for the smooth implementation of e-invoice, amendment of other rules, to reduce IGST on oxygen concentrator imported for personal use, falling under heading 9804, from 28 percent to 12 percent and to bring the rate at par with commercial imports of oxygen concentrators.”

The concessional rate of IGST on such imports shall apply up to 30 June, 2021.

Many other issues, including grant of compensation cess to the states, were also discussed during the marathon meet, which started at 11 am and ended after 8 pm. (DCM’s PR Cell)