Government waives duty on materials for COVID test kits and APIs for Amphotericin B

The government has exempted basic customs duty on imports of specified API/excipients for Amphotericin B and raw materials for manufacturing COVID test kits

The government has exempted basic customs duty on imports of specified API/excipients for Amphotericin B and raw materials for manufacturing COVID test kits.

In a notification dated 12th July, the Finance Ministry said the basic customs duty exemption on raw materials for manufacturing COVID test kits would be till 30th September, 2021.

While the exemption on specified active pharmaceutical ingredients (APIs)/excipients for Amphotericin B would be valid till 31st August.

Speaking in this regard, Abhishek Jain, Tax Partner, EY, said this is a well-thought exemption being granted by the Indian government to fight the COVID crisis, and is a step to make the domestic industry self-reliant while fighting the pandemic.

Adding to it, Rajat Bose, partner, Shardul Amarchand Mangaldas & Co said, “This is likely to further bring down the cost of such items in India making it more affordable for the common man.”

Last month, the Finance Ministry’s Revenue Department had notified the lower rates for 18 COVID- related supplies, like hand sanitiser, pulse oximeters, BiPAP machine, testing kits, ambulances and temperature check equipment. These concessional rates would be applicable till 30th September, 2021.

GST on COVID-19 drug Tocilizumab and black fungus medicine Amphotericin B was reduced to ‘nil’, from five per cent.

The rate on Remdesivir and anti-coagulants like Heparin is lowered from 12 per cent to five per cent.

GST rate on ambulance was cut to 12 per cent from 28 per cent.

Tax on medical grade oxygen, oxygen concentrator (including personal imports), ventilators, BiPAP machines and high flow nasal cannula (HFNC) devices has been reduced to five per cent from 12 per cent.

Moreover, tax on COVID testing kits, pulse oximeter (including personal imports) has been brought down to five per cent from 12 per cent.

Hand sanitisers, temperature check equipment and gas/electric furnaces for crematoriums too will attract lower five per cent tax, from 18 per cent earlier.

Mahesh Jaising, partner, Deloitte India, said that with the government preparing for the third wave of COVID, which, experts suggest to be around the corner, it is not surprising to see that the government has proactively exempted the customs duty on raw materials for COVID testing kits.

COVID test kits attract five per cent GST rate (till 30th September, and this exemption will further reduce the cost for the manufacturers and therefore, the general public.

This is aligned to the government’s support for make in India. This is also aligned to the larger rate reduction/ exemptions that the government announced in the past few months specifically for COVID-related drugs and equipment, Jaising added.