A tax ruling has said that unless products and equipment are specifically manufactured for the sole purpose of Covid vaccination, they should attract additional taxation. Tax experts say this is set to increase Goods and Services Tax (GST) on equipment used for Covid vaccination programmes.

The ruling said that manufacturing of cold chain equipment, which is used in vaccination and immunisation programmes for transporting vaccines, specimens, and blood samples, should attract 18% GST, the Uttar Pradesh Authority for Advance Ruling (AAR) said.

“The ruling places reliance on the composition of the product over its use or consumption by the dealer and the customer. One may argue that composition is not the sole criteria but only one of the criteria used to determine classification, ” said Harpreet Singh, partner, Indirect Tax at KPMG in India.

The ruling said that, as per the definition of vaccine carrier and vaccine cold box available on the UNICEF website, not all equipment can be classified as medical or surgical instruments and apparatus. The ruling, announced in December, said that all equipment should attract similar GST rates unless specifically designed for the sole purpose of Covid vaccination. “With Covid vaccines being of high social relevance in present times, the higher rate of 18% GST on vaccine carriers may increase the price in the hands of the end consumer if the companies decide to pass on the burden,” added Singh.

The AAR ruled that “the UNICEF has also treated the same as an insulated container, thus holding that subject goods are appropriately classifiable.” The Covid pandemic has created several GST complications for companies.