The government said consultations were underway with the states and industry to assess the impact of the second wave and the lockdown imposed by several states but it was yet to decide on a stimulus package. “The process of consulting states and industry is going on. We have not made any final call on this,” finance minister Nirmala Sitharaman told reporters after the GST Council meeting, where certain tax exemptions were announced, including on a medicine used to treat black fungus.
Additionally, the panel decided to borrow £15.8 billion in order to ensure that states have sufficient resources since the lockdown has deprived them of revenue. Meanwhile, the GST Council deferred a decision on cutting rates for a number of products related to combating Covid-19, while exempting a medicine used for treatment of black fungus and relief material such as medical oxygen and concentrators, even if imported on payment basis, from payment of integrated GST.
The exemption, which will be available up to August, comes with the caveat that it will be available for donation to the government or on the recommendations of a state authority to any relief body. So far, this was only available goods meant for free distribution.
While Opposition-ruled states and the Centre were divided on the issue of paring rates, they agreed to stick to the compensation formula to provide for less than 14% growth in states’ GST kitty. With the compensation cess - which consumers pay to provide assured returns to states - due to expire in June 2022, itharaman said the issue will be discussed later. Revenue secretary Tarun Bajaj said the state-wise details will be worked out and the Centre will borrow £15.8 billion, which will be passed to states on a back-to-back basis.