The Goods and Services Tax (GST) is a comprehensive tax on the manufacture, sale and consumption of goods and services at a national level. The new system is set to be a game changer, once it is implemented from the proposed date of July 1, 2017. GST is a Tax that will be levied on every value addition. The Central GST is the areas where the states has the powers and the state GST where the state has taxation capabilities. The Integrated GST is not for movement of goods within the states of the Indian union. This will collected by the union however will be transferred over to the states. Thus it is essential to rolled over in the entire nation simultaneously when it comes out.
It is believed that information technology will play a crucial role in its effective execution and hence it is necessary to have a durable infrastructure to ensure seamless compliance and tax administration but analysts warned that there will be very less effect on the inflationary impact of GST on prices of medicines in the short run of one or two years. Also, the impact on pricing of drugs will be neutral up to 12% or 18% tax rate and beyond that, there will be inflationary effect to some extent. The main concern is the rate of GST must be kept at a competitive level in order to have no increase in prices of drugs and medicines. GST may also have the impact on companies to clean up their supply chain in order to save taxes. It is seen that despite the initial issues of tax rate and compliance, in the long run, GST will be a win-win situation for both pharmaceutical companies and consumers. The Indian pharmaceutical industry, with a domestic turnover of over $15 billion, has been witnessing high growth over the past decade. But it is facing problems like cumbersome taxation, heavy competition and increasing price controls. Allopathic medicines comes under the 12% slab of the recently announced GST rates. And the pharmaceutical industry is worried that transition troubles may be around the corner, if the government does not act soon enough to tackle them. There is a lot of confusion amongst the manufacturers, wholesalers, traders and retailers. “As far as the health care and pharma industry is concerned, it is expected that the new GST legislation would benefit the consumers by making affordable health care a reality.”
The Indian healthcare sector is likely to touch $150 billion by the end of 2017. Healthcare Industries is one of the leading contributors with respect to revenue and employment from tax.Indian Pharmaceutical sector is fragmented and complex with more than twenty thousand registered units. Many pharmaceutical companies currently work on traders-of-goods model in which quite a few services they avail becomes a cost for them with service tax implications involved. But with seamless credit mechanism to be introduced by GST the service tax paid by the companies will come back to them as a refund and in that way saving the cost. The impact of GST on the pharmaceutical industry is still not very transparent. But both end consumers and industry players hope this to culminate in a win-win situation. With reduced complexities and overall reduction in cost this translates to be a profitability and promising development.
“It is still not clear that whether the healthcare sector, as well as life-saving drugs and medical devices, will continue to be exempted from the taxes after the implementation of the Act or not. In case you are confused about GST as a business owner, feel free to consult the GST experts . ”
There are Taxes that GST replaces:
- Central Excise Duty
- Service Tax
- Countervailing Duty
- Special Countervailing Duty
- Value Added Tax (VAT)
- Central Sales Tax (CST)
- Octroi
- Entertainment Tax
- Entry Tax
- Purchase Tax
- Luxury Tax
- Advertisement taxes
- Taxes applicable on lotteries.