44th GST Council Meeting — COVID-19 Emergency Relief

This was the most debated topic. Several states (especially opposition-ruled) demanded zero GST on vaccines. The Council retained 5% because: (1) At 5% GST, manufacturers can claim ITC on inputs — if exempted, ITC would be blocked and manufacturers would increase pre-tax prices; (2) The embedded taxes in manufacturing (raw materials at 18%) would become cost — passed on to consumers anyway; (3) Centre was procuring 75% of vaccines directly — GST was Centre paying itself; (4) Private hospitals buying vaccines at 5% GST could claim ITC, keeping costs lower; (5) The effective tax incidence was minimal since government was the biggest buyer. States like Kerala and West Bengal publicly disagreed.

Key exemptions/reductions (all till 31 Dec 2021 unless noted): EXEMPT: Tocilizumab (immune-modulator for severe COVID), Amphotericin B (anti-fungal for Black Fungus/Mucormycosis), anti-coagulants (Enoxaparin etc.), DEC tablets (anti-parasitic). REDUCED TO 5%: Remdesivir (antiviral — from 12%), Heparin (blood thinner — from 12%), pulse oximeters, oxygen concentrators, medical oxygen, BiPAP machines, COVID test kits, hand sanitizers, temperature equipment. Context: India faced devastating second wave (Apr-Jun 2021) with 4,000+ daily deaths, severe oxygen and drug shortages.

During India's COVID second wave (April-June 2021), thousands of COVID patients (especially those on prolonged steroids/oxygen) developed Mucormycosis — a deadly fungal infection also called 'Black Fungus'. The primary drug Amphotericin B was in severe shortage. The 44th Meeting: (1) Exempted Amphotericin B from all GST to reduce costs; (2) Recommended states implement allocation mechanisms; (3) Fast-tracked emergency procurement; (4) Also reduced GST on alternative anti-fungals (Posaconazole, Isavuconazole) to 5%. Over 45,000 Black Fungus cases were reported, with 4,300+ deaths.

Background: States were guaranteed 14% annual revenue growth for 5 years (2017-2022) under GST. Shortfall = Compensation Cess on luxury/sin goods funds it. Problem: COVID caused massive shortfall — states got ₹2.78 lakh Cr less than guaranteed. In the 44th Meeting: (1) Centre offered back-to-back loans (NOT grants) from RBI borrowing; (2) States preferred outright compensation from Centre's consolidated fund; (3) Kerala filed Supreme Court petition; (4) GoM formed to examine options. Eventually, cess was extended till March 2026 to repay the loans — confirmed in 46th Meeting.

The 44th Meeting was held on 12 June 2021 via video conferencing from New Delhi. It was an emergency meeting called specifically to address the COVID-19 second wave crisis. Context: (1) India was emerging from the devastating second wave (peak: May 2021, 4,000+ deaths/day); (2) Severe shortages of oxygen, Remdesivir, hospital beds had caused public outcry; (3) Political pressure from states to reduce/exempt COVID-related GST; (4) Black Fungus cases were spiking (45,000+ cases). The meeting was brief and focused — only COVID relief items were discussed. Broader agenda items were deferred to the 45th Meeting (September 2021).