In the new indirect taxation regime prices of necessary drugs or medicines will go up by 2.29 percent when the GST implements from next month. Basic essential medicines are categorized under the 12 percent GST rates in new taxation regime and the GST rates were declared by the government in the GST Council Meeting. Under the current taxation, structure medicines are taxable at the rate of 9 percent.
The government has revised the taxation rates of some medicines such as insulin and it will be now levied at 5 percent instead of 12 percent proposed earlier. Heparin, Warfarin, Diltiazem, Diazepam, Ibuprofen, Propranolol and Imatinib are some of the names of essential medicines which are listed on the National List of Essential Medicines.
It is announced by the National Pharmaceutical Pricing Authority that the revised ceiling price of scheduled drugs, in which excised duty is imposed on MRP, it will be calculated on the basis of factor 0.95905 on the existing ceiling price.
According to NPPA, talking about the non-scheduled drugs the Pharmaceutical companies have no other choice available to adopt the net increase if prices of the medicines increases or exceeds beyond the allowable limit of 10 per cent of MRP and it happens when there is any increase in taxation rates on new GST Regime.
NPPA also added that in the case of scheduled drugs, medicines those are non-taxable from the excise duty, their present notified ceiling price would be treated as the new ceiling price. This will be exclusive of applicable GST Rates.
The leading Pharma industry is confident enough and will ready to implement the new indirect taxation structure without facing any issues. NPPA Chairman Bhupendra Singh told that, “I am confident that GST implementation will be by and large smooth and will not cause any major disruption in the availability of drugs in the country,”
The government has revised the GST rates on medicines such as insulin and reduces its rate from 12 percent to 5 percent. Now the insulin will levy 5% percent taxation rates in new taxation regime. The companies will be required to reduce the Maximum Retail Price. According to NPPA, In term of savings due to the lower taxation rates, the benefit may be provided to consumers just by availing anti-profiteering clause in the GST compliance.
