The Goods and Services Tax (GST) Council failed to agree on immediate tax breaks for critical pandemic relief supplies, including vaccines.
Further, it constituted a Group of Ministers to recommend individual items' tax rates by June 8.
Union Finance Minister Nirmala Sitharaman, who boarded the Council's first meeting in nearly eight months on Friday, said there were protracted discussions with 'varying viewpoints' on the taxation of COVID-related items.
She also shared her decision on the announcement by a group of ministers to submit a report within ten days.
Opposition States, including West Bengal, Kerala and Punjab, have been demanding to remove that the GST levied on COVID-related.
Sitharaman explained that technical panels reviewing the rates have found that there will be a 'collateral impact' of rate cuts on other items.
"I underline the fact that it is not as if one segment said we should do it on humanitarian grounds and another said, we shouldn't do anything on humanitarian grounds," the Minister said, as reported by The Hindu.
Ms Sitharaman the Union Finance Minister refused to react directly to comments by Punjab Finance Minister Manpreet Singh Badal who alleged the lack of compassion by the Union Government in COVID-19 relief activities.
However, the Council agreed to extend the GST exemption granted on relief material received free from abroad for donations to State-approved entities, to those who want to make such donations by purchasing the material from overseas. The period for availing of this exemption has also been extended to August 31.
A special session of the Council will be held to discuss with States how long the Compensation Cess levied under the GST regime needs to be extended beyond its current sunset date of July 2022, Sitharaman said.
For maintaining the estimated shortfall in compensation cess collections to meet States' dues, the Centre will raise ₹1.58 lakh crore to recompense States via back-to-back loans, just as it was done last year.