Goods and Services Tax (GST) is a landmark reform which recently came into effect in India. The aim to roll out such a reform is to ensure there is a single tax system across the country in future. Presently, the GST system places goods and services in four tax slabs – 5, 12, 18 and 28 per cent. But there is no clarity on certain goods and services. One such category of products is pharmaceuticals or medicines. So, today we bring you all the information on GST on medicines to help you know about the impact of GST on pharmaceutical products.
GST On Medicines – All You Need To Know
Different medicines fall under different slabs. However, no pharma product falls under 28 per cent tax slab. To start with, most live-saving drugs, be it for Malaria, Diabetes or Tuberculosis, come under 5 per cent slab. Bandages, gauges and ayurvedic medicine now fall under 12 per cent tax rate. Products like Nicotex gums (to help kick the smoking habit) have been placed under 18 per cent tax slab.
#2: Change in Prices
Industry experts feel there will be a slight change in prices of all medicines. While most medicines’ prices will go up slightly, life-saving drugs such as those for Malaria, etc. may come down too.
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#3: Pricing Uniformity
There is no uniformity in pricing of drugs. This is because there are state-level taxes to take care of too. So, if you get a medicine in Delhi for Rs 5, for instance, you are not likely to get it for the same rate in Mumbai.
#4: Unclear Bits
There used to be a clause for medicine makers to be charged low tax for setting up facilities in excise-free manufacturing zones. there is no clarity on whether they will continue to benefit from low tax rates post-GST or not. Also, how will GST curb the practices such as buying medicines without bills has not been talked about. Lastly, why ayurvedic medicines will cost more is something many folks will be scratching their heads on.
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#5: Situation Now
For now, essential medicines can be bought from any pharmacist at pre-GST rates till August. One the current medicine stocks have been cleared, medicines such as those for critical illnesses will be rolled out with revised prices, followed by others.
So, this is all you need to know about GST on medicines. Do feel free to mention your thoughts in the comments below. We may even include your suggestions on this topic here. For more such stories, stay tuned to FinGyan.