Nirmala Sitharama explains why it is necessary to tax medicines
New Delhi : A day after Bengal CM Mamata Banerjee asked Centre to exempt medicines and medical equipments from taxes, Finance Minister Nirmala Sitharaman explained why it is necessary to tax medicines at 5% and medical equipments at 12% to keep the costs low.
"If full exemption from GST (Goods and Services Tax) were given, the domestic producers of these items would be unable to offset taxes paid on their inputs and input services and would pass these on to the end consumers by increasing their price," she explained in a string of 16 tweets.
Input tax credit is the refund which manufacturers can claim on tax paid on raw materials and services used to make their products, reducing the overall cost of their final product. She also notified that COVID-19 drugs and related items have already been exempted from import taxes and 70 per cent of the Integrated Goods and Services Tax (IGST) goes down to the states.
Finance Minister Nirmala Sitharaman's reply came a day after West Bengal CM Mamata Banerjee wrote to PM Narendra Modi asking him to remove taxes imposed on medicines and medical equipments like oxygen concentrators.
It was Mamata Banerjee's third letter to PM Modi - since being sworn in for a third term on Wednesday - on the coronavirus crisis in the state and in the rest of the country.
On Sunday, West Bengal reported 19,000 new Covid cases in 24 hours to take the active caseload to more than 1.25 lakh. Over 12,000 people have died so far.