GSt rates in Pharma and Ayurvedic Sector. Impact of GSt at pharma and Ayurvedic

Most of pharmaceutical preparations come under slab of 12% tax. Now matter of discussion whether it will be beneficial for pharmaceutical sector or not. As we predicted earlier in our article: What will be structure of Tax under GST about 5% or 12% tax rates under GST in Pharmaceutical Sector. Now tax rates has been issued after meeting held on GST and our prediction was almost accurate in this regard. Check for GST rates at our Article: Gst rates on Pharmaceutical products. Ayurvedic, Sidha, Unani and Homoeopathic products are also come under slab of 12% whereas cosmetic products fall under slab of 28% including herbal cosmetics.

Related Post: How to File Goods and Service Tax (GST) Return?
How to apply for GST registration?

Have round-up of Tax slab in Pharmaceutical Sector:

  • Human Blood and its component: Nil / Zero Percent (0%)
  • Contraceptives: Nil / Zero Percent (0%)
  • Animal or Human Blood Vaccines: Five Percent (5%)
  • Diagnostic kits for detection of all types of hepatitis : Five Percent (5%)
  • Desferrioxamine injection or Deferiprone: Five Percent (5%)
  • Cyclosporins : Five Percent (5%)
  • Medicaments (including veterinary medicaments) used in bio-chemic systems and not bearing a brand name: Five Percent (5%)
  • Oral re-hydration salts: Five Percent (5%)
  • Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 3 or List 4: Five Percent (5%)
  •  Formulations manufactured from the bulk drugs specified in List 1: Five Percent (5%)
  • All other goods not specified elsewhere including fixed dose combinations: Twelve Percent (12%)
  • Ayurvedic, Unani, Siddha, homoeopathic or Bio-chemic systems medicaments : Twelve Percent (12%)
  • Wadding, gauze, bandages and similar articles: Twelve Percent (12%)
  • Forms or packings for retail sale for medical, surgical, dental or veterinary purposes: Twelve Percent (12%)
  • Waste pharmaceuticals : Twelve Percent (12%)
  • Nicotine Polacrilex Gum: Eighteen Percent (18%)
  • Cosmetics and Skin preparations ( Other than medicaments) : Twenty Eight Percent (28%)

In this article, we will try to find out what will be impact of GST at pharmaceutical sector of 12% tax slab.

Impact 1: End of Excise Free Pharma/Ayurvedic manufacturing zones.
Impact 2: Re-opening of Pharmaceutical/Ayurvedic units in excise zones that have been closed due to Excise Free Zones.
Impact 3: Boom in Condoms and contraceptives manufacturing sector.
Impact 4: Increase in demand of Ayurvedic cosmetics as tax is lower as compare to purely cosmetic preparations. Ayurvedic Cosmetics preparation may boom in market and capture more share of beauty and wellness sector.
Impact 5: Distribution Channel will become simple and involvement of persons in distribution channel could be decreased.
Impact 6: Decrease in medicines without Invoice will happen. Every one will try to take invoice as he have to pay tax in all conditions.
Impact 7: Business will become more transparent.
Impact 8: Maximum retail price may increase at little bit but dpco will keep rates in check.
Impact 9: End of excise duty will lower burden and involvement of excise officers in manufacturing sector that could be big factor for relief at small scale industry.
Impact 10: Transportation cost may increase at small extent.

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