Will GST be waived on Vaccine?

The COVID-19 pandemic left a drastic impact on every sector and changed the way we operate business, conduct and interact.


GST on medicines and medical supplies in India is taxed at four rates, NIL, 5%, 12% AND 18% among which the lowest GST rate of 5% is charged on life-saving drugs like vaccines and medicines like Tuberculosis, AIDS, Diabetes, Malaria, among others.

Centre may waive GST on vaccine

The government has already waived 10% import or custom duty on most essential pharmaceutical raw materials required for the manufacturing of the COVID vaccine plus a 16.5% I-GST and social welfare surcharge vaccines coming from overseas. Moreover, the government is now thinking about scrapping the 5% GST also on similar grounds.

As a Philanthropic gesture, Pune-based Serum Institute of India on Wednesday announced the price reduction of ‘Covishield’ vaccine from Rs. 400 to Rs. 300 per dose to the states. According to some of the sources, there’s not likely much of a discussion on tax exemption on COVID Vaccine as India is already struggling massively with the second wave of the virus and people are suffering drastically.

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A waiver in GST, if approved, will decrease costs for governments, as well as boost more private players to purchase and distribute vaccines.

Why is Government waving off the GST on Vaccine?

Under the third phase of India’s Vaccination drive, the vaccine will no longer be free of cost, manufacturers will be required to supply 50% of their monthly production to the government and rest they can sell it to the state government or the open market. Amidst all these, the government has asked the manufacturing companies to lower down the rates. As mentioned by the Serum Institute that reducing the cost of vaccines will ensure more vaccinations and will save countless lives. A waiver in GST, if approved, will decrease costs for governments, as well as boost more private players to purchase and distribute vaccines. This move will support inoculations and will give some respite from the current crisis. It will also provide relief to people in all states and beside all this it will not have any significant revenue implication.

How will it affect the State?

Earlier, Serum Institute has declared that it will value its Covishield at Rs. 400 and Rs. 600 for state and private clinics respectively. Whereas Bharat Biotech will be charging their Covaxin for Rs. 600 and Rs. 1200 for the same sectors for each portion. The two manufacturing companies have been supplying the doses at Rs. 150 to the central government which is being distributed free of cost to the government employees and frontline workers. This creates a situation where the state will have to purchase vaccines from Serum Institute at over double the value it is charging central government and from Bharat Biotech, four times the value it is charging the center. While the center has undertaken to inoculate 30 crore individuals, states will bear double of that burden but will have to spread across all of them.

Vaishali Das
Vaishali Das
Vaishali writes on financial concepts, business-life-cycle, start-ups and entrepreneurship. An alumna of Delhi University she specialises in digital publishing and SEO.

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