Goods and Services Tax in Maharashtra: Cost of 78% medicines, drugs won’t change
Mumbai city news: Most medicines and drugs will cost the same under the new single-tax system, but the pharmaceutical sector is bracing for losses in the short-termUpdated: Jul 01, 2017 10:49 IST
Most medicines and drugs will cost the same under the new single-tax system, but the pharmaceutical sector is bracing for losses in the short-term.
On Friday, the National Pharmaceutical Pricing Authority (NPPA) tweeted: “Prices of approximately 78% of all actively used and traded drugs in the country are going to remain unaffected post GST.”
But the sector is expecting a mixed impact. The Goods and Services Tax (GST) will increase the ease of doing business for the pharmaceutical industry, but they will have to deal with short-term losses.
Distributors of medical devices said they were looking forward to GST, as it would abolish a number of taxes and improve distribution channels.
“In spite of paying 5% to 12% Central Sales Tax (CST) and 6.5% Value Added Tax (VAT), we were also paying 5 to 5.5% Octroi every time products came into Thane, Navi Mumbai and Mumbai,”said Sudhir Subgule, a medical device distributor .
“To evade taxes, many distributors were forced to transport products though hidden channels,” he said.
Sabgule said paying just one tax, between 5% and 12%, would make it easier to do business.
The All India Organisation of Chemists and Druggists (AIOCD) said it was in talks with manufacturers to make sure profit margins were unaffected. AIOCD has been opposing GST.
“We also deal in non-emergency medicines, such as dermatological products, diabetic medicines and body-building products, all of which fall into a higher tax bracket of 28%,” said Prasad Danve, an AIOCD member.
“We have to incur losses as we have already paid taxes on these products in the previous tax regime,” Danve said.
Another issue that those in the sector pointed out was the lack of clarity over the ‘input tax return’ system. Under this, a wholesaler or retailer can claim taxes paid on purchases of a product from the government.
But chemists claim there is too much ambiguity in the system and the conditions to avail this benefit were not clear. “We have to file the input tax return every month and the system has proved inefficient in the past,” Danve said.