Tax on Covid jabs: PM Modi’s vaccine policy change may end dispute with states

With PM Modi announcing a centralised vaccine procurement plan, under which states will not pay for the vaccines, the debate on taxing vaccines is virtually resolved.

Prime Minister Narendra Modi’s address to the nation on Monday may bring a partial truce of sorts in the GST Council. The council, which is the supreme decision-making body on GST-related issues, was split down the middle over the current 5% GST on Covid-19 vaccines. Many non-BJP states have demanded that the jabs must be exempted from tax. With PM Modi announcing a centralised vaccine procurement plan, under which states will not pay for the vaccines, the tax tussle is virtually resolved. Under the new purchase regime, even if the 5% tax stays in place, the Centre will be paying the tax when purchasing 75% of the vaccines for states. Centre will be collecting the vaccines and sharing them with states, putting no burden on those who get the jabs.