Tax rates under GST has been disclosed and every where there is discussion about Goods and Service Tax(GST). Everyone is calculating pro and cons of GST at its sector. We have discussed about impact of GST at pharmaceutical sector in our previous article: GST Rates for Pharmaceutical Products and What will be the impact of GST (Goods and Service Tax ) at pharmaceutical and Ayurvedic sector. In this article, we are going to discuss about Ayurvedic Cosmetics products Vs Cosmetic Products Vs Derma Cosmetic Products.
At present there are three type of Cosmetic Products available in Market:
If you are confused why we are talking about Medicated cosmetic preparation, Ayurvedic Cosmetic and Other cosmetic products. Then there is a big reason behind it. We are discussing it because of Goods and Service Tax rates on these products. Dermatological products will come under 12% tax rate, same for cosmetic products under Ayurvedic proprietary but for cosmetic products (including cosmetics come under herbal tag) GST will be 28%. That makes the difference. There is 16% tax difference if a products is manufactured under cosmetic category rather than derma category and Ayurvedic Category. High tax rates means, simple cosmetic products will be costlier as compare to Ayurvedic Cosmetics.
Related Post: How to File Goods and Service Tax (GST) Return?
Now question arise, how can we differentiate between above three types of Cosmetic Preparations. There are three types of cosmetic products present in market as mentioned above.
Derma Cosmetic products are the cosmetic preparations that are manufactured under pharmaceutical manufacturing license. These are medicated preparation and used for any of prescribed indications. Some derma products are promoted as OTC and sell out without prescription of registered medical Practitioner. Derma Preparation will have 12% tax under GST structure.
Ayurvedic Cosmetic Products are the cosmetic preparations that are manufactured under Ayurvedic manufacturing License. These products bears tag of Ayurvedic Medicines. Ayurvedic Preparation will have 12% tax under GST structure.
Cosmetic Products are the preparations that are manufactured under purely Cosmetic manufacturing license. Cosmetic Products will have 28% tax under GST structure.
First two preparations has 12% tax whereas third one has 28% tax. This makes huge difference in this category. First one is medicated and can’t give much competition in wellness segment but Ayurvedic cosmetic products have been started capturing share in health, wellness and beauty section. It will make further expansion by providing cheaper products as compare to simple cosmetic products. As demand of Ayurvedic Cosmetic products is increasing, lower tax structure as compare to simple cosmetic cosmetic preparation will provide more benefits to Ayurvedic cosmetics.
Products containing herbal label will also attract 28% tax if it is not an Ayurvedic Preparation. Ayurvedic Cosmetic products are going to be more cheaper as compare to simple cosmetic products (including herbal cosmetic products).
We will highly appreciate your views and comments on this matter…