GST Council Discusses COVID Cess Proposal by Sikkim: Sources

In a bid to increase revenues amid the second wave of coronavirus pandemic, the Goods and Service Tax (GST) Council discussed Sikkim government’s proposal to levy a COVID-19 cess in the state, sources told CNBC-TV18.

Sikkim government has proposed to implement a COVID cess on pharmaceutical and power sector in the state. The government wanted to implement COVID cess of 1 per cent on the pharmaceutical sector turnover in the state for the next two years. Another proposal was on the imposition of COVID cess of 0.1 per cent per unit power generation in the state for the current fiscal and the next.

The GST Council will constitute a group of ministers (GoM) to examine Sikkim’s proposal, which will submit its recommendation on the matter to the Council in two weeks, according to CNBC-TV18. Other states such as Arunachal Pradesh, Meghalaya and Goa may also propose levying a state COVID cess, the source added.

Union finance minister Nirmala Sitharaman chaired the Goods and Services Tax (GST) Council meeting on Friday, after a gap of seven months. Ravaged by COVID-19 pandemic, several states have urged a reduction in GST rates on essential COVID-19 supplies including various medicines, medical devices, and health services. “GST council should look at making COVID drugs and equipment exempt and notify them as zero rated, so that input tax credit is not lost and the prices do not rise. The reason given by the Finance Minister that exempting these would lead to rise in prices may be countered by making them zero rated,” said Srinivas Kotni, managing partner, Lexport, said.

Traders’ body CAIT on Thursday sought extension of the deadline for filing various GST returns till August. In a letter to finance minsister Nirmala Sitharaman CAIT urged the Centre to extend the date of filing of various GSTR returns till August under the GST Act and Rules, without late fee and interest.

Seven states — Punjab, Rajasthan, Chhattisgarh, Jharkhand, West Bengal, Tamil Nadu and Kerala — met virtually on Wednesday and discussed what priorities need to be pursued and how to improve the structural part of the GST.

“Opposition states will be asking for an outright grant and no borrowing tomorrow and also an extension of the period of compensation,” said Punjab finance minister Manpreet Singh Badal.

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