VISUALIZING CHALLENGES OF GST ON DIFFERENT CORNERS OF PHARMACEUTICAL INDUSTRY

 

GST ON MEDICAL SHOPS
These retailers does not have any excise sale invoice or VAT invoice with them but tax such as excise and VAT are already paid. Now in the GST regime, retailers are also entrusted to collected tax from ultimate customers and take credit of the stock in hand and they have on some method prescribed (india-gst.com).

Table no:1 PERCENTAGE OF GST ON DIFFERENT PHARMA PRODUCTS
(gstcouncil.gov.in, india-gst.com, novalife.in)

 Percentage

 

Pharmaceutical products

NIL

1.Human blood  and its components, 2. All types of contraceptives.

5%

1.Animals or Human blood Vaccines, 2.diagnostic kits for detection of all types of hepatitis

12%

1.Desferrioxamine  injection or deferiprone, 2.cyclosporine, 3.Medicaments

(including veterinary medication) used in bio-chemic system and not a bearing a brand name, 3.Oral re-hydration salts, 4.drugs or medicines including their salts and esters and diagnostic  test kits, specified in List 3: (1.Allopurinol 2.Amrinone 3.Amifostine 4.Baclofen 5.cefoperazone 6.Desferrioxamine Etc.) or List 4 (1.Asparaginase , 2.Anti-Haeomophilic factor concentrate (VII & IX), 3. Blood group sera, 4.Calcium folinate , 5.Cyanamide) appended to the notification no.12/2012, Customs, dated the 17th march, 2012. 5.Formulations manufactured from the bulk drugs specified in list 1(1.Streptomycin, 2.Isoniazid, 3.Thiacetazone, 4.Ethambutol, 5.Sodium PAS) of notification No.12/2012- central excise, dated the 17th march, 2012.

18%

All goods not specified elsewhere

1. Glands and other organ for organ-therpeutic uses, dried, whether or not powdered, extracts of glands or other organ or of their secretions for organo-therapeutic uses; heparin and its salts; other human or animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included
2. Animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes, toxins cultures of micro-organisms (excluding yeasts)   and similar products
3. Medicaments consisting of two or more constituents which have been mixed together for therapeutic or prophylactic uses, not put up in measured doses or informs or packings for retail sale including Ayurvaedic,unani, Siddha, homoeopathic or bio-chemic system medicaments.

28%

Nicotine polacrilex gum

WHAT PHARMA INDUSTRIES WILL GET
1. Less tax compliance (Yogesh, 2006).
2. Removes cascading effects of taxes (Yogesh, 2006).
3. Manufacturing costs will be reduced, Hence prices of consumers goods likely to come down (Yogesh, 2006).
4. Implementation of GST will have significant impact and change the manner in which business is carried out in comparison with the existing ways (Manish and Siddharth 2014).
5. The application of single tax rate across all goods and service will result in redistribution of taxes across all categories. This will lead to a reduction in taxes on manufactured goods and thereby impacting the pricing of final produc (Manish and Siddharth 2014).
6. We recommended the pharmaceutical companies begin now the process of assessing the potential impact to their business and developing a transition plan to achieve four key objectives:
• Engage the government on issues and requirements that are important to the business in an efforts to influence the GST rule-making process (Suresh 2016).
• Avoid any business desruption  on the cut-over date (Suresh 2016).
• Achieve 100% compliance with all legal and procedural requirements under the GST (Suresh 2016).
• Identify and implement any available atx and business/operational planning or cost management opportunities, recognizing that implantation of such opportunities may require long lead times (Suresh 2016).
The research based pharmaceutical industries was hopeful that there would be a reduction in the tax incidence on pharmaceutical product (biospectrumindia.com).

CONCLUSION:
On the whole GST is expected benefit the pharma and healthcare industries. It will create a level playing field for genetic drug makers, boost medical tourism and simplify the tax structure. The pharma sector is hoping for a respite as it will make affordable healthcare easier to access by all. Under GST it is expected to Achieve 100% compliance with all legal and regulatory requirement GST will beef up the supply chain across the country more efficiently. Inter-state transaction between two dealers will become tax neutral, replacing traditional C&F DISTRIBUTION MODEL, Most of the companies have to restructure their entire distribution chain thus, focusing more on religion hub rather than multiple state.The biggest advantage to the industry would be that of reduction in transaction cost, with an immediate impact coming from the discontinuance of CST. The multiple stage taxation along with the inability to take full benefit of the CENVAT credit/ refund has been an issue for industry. With central GST expected to be a single rate for goods and services, going forward credit accumulation may be an area of concern.

REFERENCES:
a)  Yogesh, KA. Goods and Services Tax and Its Impact on Indian Economy. IOSR-JBM.. 2017;19(10):26-30.
b)  Bala N, Mali N. Goods and services Tax (GST) in Indian pharmaceutical and its impact on industry. Pharma Tutor. 2017;5(8):7-11.
c)  Manish P, et.al. GST impact on business strategy of pharmaceutical companies. Biospectrum. 2016:55-57.
d)  Suresh Nair. India’s looming Goods and Services Tax (GST): considerations for the pharmaceutical industry. EY publication india. 2016:1-6.
e)  Manish P, Siddharth P. GST : A sweet pill for Indian Pharma. Tata Strategic Management Group.   2014:1-4.
f)  Deepalakshmi K, et al. The Gst of it. The Hindu. [http://www.thehindu.co/].
g)  GST to have constructive effect on the Pharma and Healthcare sectors. Biospectrum. [https://www.biospectrumindia.com/]. 2017:1-3.
h)  GST rate schedule for goods, As per discussions in the GST Council Meeting held on 18th May, 2017. [www.gstcouncil.gov.in/gst-rates].
i)  GST rates on pharmaceuticals products. Nova life health care. [http://www.novalife.in]. 2017:1-5.
j)  Datey VS. GST Ready Reckoner, Taxmann , 4th Edition 2017.
k)  Abhishek AR, Professional‟s Guide to GST - From Ideation to Reality, Lexis Nexis.
l)  Nitya Tax Associates ,Basics of GST, Taxmann , 1st Edition August 2016.
m)  Girish, G. Basic Concepts and Features of Good and Service Tax In India, International Journal of scientific research and management (IJSRM). 2014;2(2):542-54.
n)  http://www.cbec.gov.in/htdocs-cbec/gst
o)  http://www.mib.gov.in/
p)  www.india-gst.com.

NOW YOU CAN ALSO PUBLISH YOUR ARTICLE ONLINE.

SUBMIT YOUR ARTICLE/PROJECT AT editor-in-chief@pharmatutor.org

Subscribe to Pharmatutor Alerts by Email

FIND OUT MORE ARTICLES AT OUR DATABASE


Pages

FIND MORE ARTICLES