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Pharma companies seek clarification from DoP on Covid drugs to be taxed at 5% GST
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Laxmi Yadav, Mumbai
June 26 , 2021
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The drug industry has urged the Department of Pharmaceuticals (DoP) to specify Covid drugs to be taxed at 5 per cent GST as they have not been mentioned in a notification issued by the finance ministry's revenue department on June 14 lowering tax rates for 18 Covid-related supplies.
As per the notification, GST rates on Covid-19 drug- tocilizumab and black fungus medicine amphotericin B have been waived off from earlier 5 per cent. The rate on remdesivir and anti-coagulants like heparin was reduced from 12 per cent to 5 per cent. Tax on medical-grade oxygen, oxygen concentrators (including personal imports), ventilators, BiPAP machines, high-flow nasal cannula (HFNC) devices, Covid-19 testing kits and pulse oximeters (including personal imports) has been decreased to 5 per cent from 12 per cent.
The tax on hand sanitisers, temperature check equipment, gas/electric furnaces for crematoriums has also been lowered to 5 per cent from 18 per cent earlier. The GST rate on ambulances was reduced to 12 per cent from 28 per cent.
These concessional rates would be applicable till September 30, 2021.
However, the notification stated that any other drug recommended by ministry of health and family welfare (MoHFW) and DoP for Covid treatment will be taxed at 5 per cent.
The 44th GST Council met under the Chairmanship of Union finance and corporate affairs minister Nirmala Sitharaman on June 12, 2021 decided to reduce the GST rates on the specified items being used in Covid-19 relief and management following recommendations from a group of ministers (GoM).
Since the list of drugs to be taxed at 5 per cent has not been explicitly specified in the notification issued by the revenue department, it can lead to a lot of confusion on account of interpretation of Covid drugs by different state health authorities. Pharmaceutical companies are seeking clarification from DoP in this regard.
Taking serious note of this, Indian Drug Manufacturers’ Association (IDMA) has submitted a representation to DoP secretary S Aparna and Shubhra Singh, chairperson, National Pharmaceutical Pricing Authority requesting them to list out the Covid drugs which have not been specified by the 44th GST Council for proposed 5 per cent tax.
It will remove ambiguity in interpretation of Covid drugs by health administration in various states and save drugmakers from hardship on account of overcharging and GST violation, stated the industry body.
On June 16, 2021 NPPA has asked drug firms and medical device manufacturers to lower prices on products on which the GST has been reduced, so that the benefit of reduction should be passed on to the consumers.
The price authority has been tasked to fix and revise the prices of controlled bulk drugs and formulations, and to enforce prices and availability of the drugs in the country.
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