GST rates on scientific and technical instruments to public research institutes went up from 5% to 12% or 18%. While scientists agree with the move to normalise taxes across different sectors, they say current and upcoming grants should be revised accordingly. The new rates combined with the push to manufacture scientific equipment in India, will adversely impact research, scientists say. The rationalisation of the goods and services tax (GST) rates has dealt a severe blow to Indian scientists. As the tax rates on scientific and technical instruments to public research institutes went up from 5% to “applicable rates,” scientists will now have to pay 12% or 18% GST on equipment they purchase. The new rates came into effect on July 18, 2022. This change was part of the recommendations made by the group of ministers (GoM) led by Karnataka chief minister Basavaraj Bommai, approved during the 47th GST Council held at Chandigarh on June 28 and 29, 2022.  The primary source of funding for scientific research in India is government grants through agencies like the Department of Science and Technology (DST), Science and Engineering Research Board (SERB), Department of Biotechnology (DBT), Indian Council of Medical Research (ICMR), and Council of Scientific and Industrial Research (CSIR). These grants are typically given to principal investigators (PIs), i.e. scientists who propose the study, for a period of three years. But there have been some notable exceptions recently, like the India Alliance grants that are awarded for five years.  These grants are awarded to PIs from different research institutes and universities across the country only after a group of subject experts deem them worthy of it. It’s a competitive process, where only a fraction of the applications gets the grant. The PIs then hire other scientists and procure equipment, reagents and consumables needed for research from the money sanctioned through these grants. Most of these funds have specific amounts allocated to equipment or consumables, which are clearly demarcated. Also, unlike in the West, the grants have little to no ‘overhead’ amount allocated to the institutes or universities that host these PIs. The ‘overhead’ doesn’t go directly to the proposed research project but to expenses related to the institute’s R&D infrastructure and support. This money comes ultimately from the government-allocated budget for science and technology. India’s spending on research and development stands at 0.66% of the national GDP, which is quite low compared to Asian counterparts like China (2.2%) and Japan (3.5%).  Effects of revised GST rates When the Union government introduced GST in July 2017, scientific and technical instruments were taxed at 5% as long as the PI could produce a Department of Scientific & Industrial Research (DSIR) certificate, which recognises Scientific and Industrial Research Organisations (SIRO). But the withdrawal of this concession has left the scientists dismayed.  Ayan Banerjee, a professor of physical sciences at the Indian Institute of Science Education and Research (IISER), Kolkata, described this move as “nothing but a reduction in research funding by the same amount.” He added that the government could mitigate this issue by increasing funding at the level of individual grants or providing extra funds to the institutes to bear the additional GST expenses.  Sandhya P. Koushika, a professor of biological sciences at the Tata Institute of Fundamental Research (TIFR), Mumbai, echoed these concerns. She said that although it is not a bad idea per se to have an 18% GST to normalise taxes across different sectors, it would be a problem if current and upcoming grants are not revised accordingly. Otherwise, they would “essentially have less rupee value, i.e. the amount to spend on your consumable bills or new equipment.”  Several scientists took to Twitter to express their concern about the move.  Amitabha Bandyopadhyay, a professor of biological sciences and bioengineering at IIT Kanpur, tweeted, “This will certainly have one crippling effect — Grants that are already sanctioned, but equipment/consumables yet to be paid for, will be insufficient to procure goods. Simultaneously an order should be issued to the funding agencies for allocating 13% of grant value as top up.” He also explained how this change would affect ongoing research in a Twitter thread tagging the finance minister, Nirmala Sitharaman.  But the revision of GST rates is not all. In a tweet dated July 20, 2022, Banerjee drew attention to another important issue. “So it seems that not just GST, but even customs duty has gone up from 2–30%! Which, with the GST increase included, means a 43% increase in costs (= reduction in funding)! This is like a death knell for experimentalists! ANYBODY listening??” he tweeted.  So it seems that not just GST, but even customs duty for research items has gone up from 2-30%! Which,with the GST increase included,means a 43% increase in costs (=reduction in funding)! This is like a death knell for experimentalists! ANYBODY listening??@ArindamPhysics @ydnad0 — Ayan Banerjee (@ayanban7) July 20, 2022 “For physicists engaged in experiments at least, there is pretty much nothing available in India for any precision experiments that are competitive with the best research in the world,” Banerjee told The Wire Science. He explained that the increase in duty would make a “deeper a cut into our funding bucket, and even put a stop to our research”. If remedial measures are not taken, it could also affect some of the most ambitious projects in the country. “This will be a horror story for the scientists who have been funded by the DST Nano-mission or the QUEST initiative,” he said. He added that these researchers, who have received funds “to make us competitive globally in precision quantum dynamics-based technology…may now fall short and basically fail to buy anything at all.”  Collateral damage to the research ecosystem? Some scientists also felt that though the government’s measures may be well-intentioned, the research community is facing collateral damage. In a series of tweets, Bandyopadhyay highlighted the “issues that have cropped up in the recent years due to government’s genuine efforts in bringing about fiscal discipline with taxpayers’ money.”  One of the tweets read, “Stand alone, none of the measures that have been rolled out is inappropriate. However, it has crippled our ability to conduct research. If remedial measures are not taken on an urgent basis, the whole ecosystem will collapse.” A scientist in a laboratory. Photo: ThisIsEngineering/Pexels

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