Import Duties and Taxes lifted on Imports of COVID Relief Items

As India is going through a deadly phase of the Covid-19 pandemic that has stressed out health infrastructure and caused scarcity of medical supplies and relief items in-country, Government has decided to temporarily lift the tax burden on imports of covid relief items so as to maintain adequate stock of these relief items in the country. In this regard, exemption of duties of Import has been granted in respect of 22 covid relief items such as remdesivir Diagnostic kits(Notification No. 27/2021–Customs dated 20^th April 2021), oxygen concentrator, oxygen generator, ventilators, covid-19 vaccine, etc. (Notification No. 28/2021-Customs dated 24^th April 2021).

Whenever particular goods are imported into Indian territories, these are basically subject to two types of taxes, namely Custom duties and IGST. In the wake of the Covid-19 pandemic, the Government has unconditionally exempted the Basic custom duty and Health cess on import of these relief items (except for few specified raw materials which would be used for manufacturing the final medicines). The IGST exemption can be availed only by the specified class of importers subject to certain conditions and procedures to be complied by such importer (Ad hoc Exemption Order No. 4/2021-Customs dated 3^rd May 2021).

IGST Exemption

State Government or, any entity, relief agency, or statutory body, authorized by State Government are the only eligible persons for IGST exemption on import of these relief items. It may be noted that the primary condition to avail this exemption by the eligible importer is that the relief items must have been received free of cost (i.e donated from abroad) for free distribution anywhere in India for covid relief. Therefore, there are dual aspects, first that the relief items must be received in India for free of cost and not procured from abroad, second the distribution in India must also be on a free of cost basis and not be utilized for commercial activities.

So as to meet the above-mentioned conditions, importers are required to approach Nodal Authority (appointed by state governments) for a ‘Certificate specifying that the imported goods are meant for free distribution for Covid relief purposes by such eligible importer. The importer shall produce such a certificate to Custom authorities for claiming exemption of IGST. Once goods are cleared from customs, another compliance that importer needs to take care of is obtaining a ‘Statement’ from the Nodal Authority containing details of goods distributed free of cost and shall produce the same before the customs authorities within 6 months (can be extended up to 9 months) from date of importation.

Exemption of basic custom duties is temporarily waived till 31^st October 2021 on 4 items including remdesivir, Diagnostic kits, etc., and till 31^st July 2021 on 18 items including oxygen concentrator, oxygen generator, ventilators, covid-19 vaccine, etc. As far as IGST exemption on these items is concerned, the same shall remain in force up to 30^th June 2021.