India 05 August 2016: Speaking on the Impact of GST on Medicine, Ms. Shobana Kamineni, Vice Chairperson, Apollo Hospitals Group, President Designate, CII, said, “GST is India’s biggest tax reform since Independence. It truly unifies the country under a single indirect tax. We fully support and congratulate the Government and all political parties for passing the legislation.
With respect to medicines however, we request some leniency. The current tax rate is 4%, and the proposed 12 % maybe passed onto the consumers since the manufacturers have been severely hit by pricing controls and the retailers are already deeply discounting their margins to the customer. Passing on the increased tax is the only option.
Additionally, the bill will impact free-drug samples, bonus schemes and expired material return system and the companies will need to re-think on incentives. Without these incentives the retail pharmacies will again be impacted.”
Ms. Kamineni added, “On the positive side, the Traditional Cost and Freight (C&F) distribution model will be replaced by Supply Chain Efficiencies. Central tax will be subsumed under GST and Inter-State Transactions between two dealers will become tax neutral, and the benefits may eventually get passed on.
The Government is committed to making healthcare affordable to our entire population, and we recommend that in the initial years the tax rate on medicines remains the same.”