In view of the ongoing pandemic crisis in India, the government is playing a crucial role in dealing with the worst situation ever faced by the country. The second wave of COVID-19 has hit the country badly as cases swept across all corners leading to increased demand for medical products. As cases rose rapidly, India started facing a huge shortage of medical supplies. Thus, to address the needs of the people and increase the production and supply of anti-COVID-19 drugs, the government is providing relaxations in the import of medical goods in India.
The import of goods or services is subject to IGST and basic customs duty along with health cess. The Central Government has exempted COVID-19 related relief materials from the duty of customs leviable thereon for a limited period vide several notifications. Following is the summarized view of notifications issued for exemption of medical supplies:
|Notification No. 27/2021 & 29/2021 – Customs Dated 20th April 2021 & 30th April 2021 respectively|
|Chapter or heading or sub–heading or tariff item||Description of goods (exempted from whole of custom duty) applicable up to 31st October’2021|
|29||Remdesivir Active Pharmaceutical Ingredients|
|29||Beta Cyclodextrin (SBEBCD) used in manufacture of Remdesivir, subject to the condition that the importer follows the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.|
|3002 3822||Inflammatory Diagnostic (marker) kits, namely- IL6, D-Dimer, CRP (C-Reactive Protein), LDH (Lactate De-Hydrogenase), Ferritin, Pro Calcitonin (PCT) and blood gas reagents.|
|Notification No. 30/2021 – Customs Dated. 1st May, 2021|
|Reduced IGST rate up to 30th June, 2021on Oxygen Concentrator imported in India for personal use falling under Heading 9804 of the First Schedule to the Customs Tariff Act, 1975 from 28% to 12% to bring IGST rate on such personal imports at par with commercial imports of the same.|
|Notification No. 28/2021 – Customs Dated. 24th April, 2021|
|Numerous medical supplies including medical oxygen, Oxygen canister, Oxygen storage tanks, Oxygen generator, ISO containers for Shipping Oxygen, Cryogenic road transport tanks for Oxygen etc have been exempted from whole of Custom duty and Health cess up to 31st July,2021. (For exhaustive list of items, refer the notification mentioned above)|
Note: Only custom duty has been waived on the items listed in notification No. 27 and 29 whereas notification no. 28 provide an exemption to Custom duty along with health cess on the items specified.
Furthermore, post-issuance of notification No. 27 & 28, the Central Government received quite a lot of representations from corporate entities, other Associations/entities, and charitable organizations from outside of India looking for an exemption from IGST in addition to customs duty on the import of Covid-19 relief material donated/received free of cost from outside India for free distribution.
|Important Note: It would also cover goods already imported but lying uncleared on the date of issuance of exemption i.e. 3rd May 2021.
After evaluating the representations, the Central Government has permit exemption from IGST on import of those goods received free of cost for free distribution for Covid-relief, but these exemptions are subject to certain conditions as stated in the Ad hoc exemption Order number 4/2021 dated May 03, 2021, which shall remain in force till June 30, 2021.
Following are the conditions that need to be fulfilled to avail exemption from IGST based on of Ad hoc exemption order number 4/2021 :
- The goods listed in notification No. 27 and 28 should be imported by State Government or, any entity, relief agency, or statutory body, authorized in this regard by any State Government.
- The importer shall before clearance of goods produce a certificate issued by nodal authorities to Deputy or Assistant Commissioner of Customs that goods are meant for free distribution for Covid relief.
Meaning of Nodal Authority: State Government shall appoint a nodal authority in the state for this exemption. The Nodal Authority so designated will give a permit to an entity, statutory body, or relief agency for distributing such Covid-relief material for free…
- The importer shall produce, to the Deputy or Assistant Commissioner of Customs, at the port within six months from the date of importation or within such continued period not crossing nine months, a simple statement including details of goods that are imported and distributed free of cost. This statement shall be appropriately certified by the said nodal authority of the State Government.
Conclusion: As customs duty is exempt for a limited period, imports will not attract any IGST if conditions specified in the order are fulfilled.
It was the need of the hour for such exemptions to support the affected individuals in such a tough time.
Hoping that together, we will tide through these dreadful times. #IndiafightsCorona
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CA Tarun Kapoor
AKGVG & Associates