‘’GST on drugs must not result in higher tax’’

The Government might finalise implementation date of GST and we expect the total tax rate for pharma industry to increase. To ensure continued availability of medicines, GST on drugs and pharmaceuticals must not result in higher tax incidence compared to existing rate. Pharma manufacturers are required to keep aside a few boxes of each batch of medicine manufactured till its expiry as ‘control samples’ as per the provisions of the Drug & Cosmetic Act & Rules. These cannot be sold and as such should be fully exempted from Central Excise Duty. Similarly, some samples of their medicines are provided to the medical doctors as ‘Physician’s samples’ to gauge their efficacy. These must be kept out of purview of all duties and taxes. The Indian pharma industry has always responded to the urgent calls of our Government, both in Centre and in States, in times of disaster and natural calamities by providing free medicines anywhere in India, without minding the production costs and expenses involved in reaching the medicines to those affected victims. It is sad that despite our repeated requests and representations, the Government continues to tax these voluntary free medicines by imposing excise duty and sales tax on them! Considering the noble gesture by pharma companies, Exemption Notification should be granted suo moto, in regard to medicines supplied free of cost during national calamities and where, Central Excise Duty has been paid in such cases, refund of duties should be promptly granted. Non profit organisations operating on a mutuality basis and regulated by applicable statutes (in particular bodies like Trade Associations and Co-operatives) need to be kept out of the purview of service tax.

The last few budget presentations have almost overlooked the pharma industry, whose capability in providing affordable quality medicines is recognised globally. This year we expect that suitable incentives and concessions will be provided to keep our growth momentum.

– Daara B Patel, Secretary-General, IDMA