GST Imapcts On Pharma Industries - Pharma C and F Agetnt | Quality Lifesciences Pvt LtdA lot of discussions and debates had ensued as we all awaited this very new, multi- stage and destination-based, comprehensive tax. And everyone was especially curious as to how this Goods and Services Tax would affect the pharmaceutical and healthcare industry. Our country is the largest producer of generic medicines in the world, and we’ve been ranked 3rd when it comes to the sheer volume of medicines we produce. With no less than 8 different taxes being imposed on the industry, it comes as no surprise that they were looking forward to a uniform taxation. And so, with more or less two months gone by since GST came into force, we’re here looking at how much of the anticipation was actually true.

Before we had GST, we had VAT. With the advent of GST though, the changes are being expected in terms of greater operational smoothness than anything else. Sure, benefits will be seen when it comes to cutting down corruption as well as compliance, but the pharma products belonging to the 5 or 28 percent bracket are unlikely to see a detrimental impact.

When we talk about operational smoothness that might be a result of this regime, we mean it because GST will now absorb all the cascading inter-state taxes that one had to pay. Also, it’s a welcome move by the government that healthcare services have been exempted from GST. With inter-state transactions between two dealers becoming tax-neutral, the supply chain of goods is expected to become far more efficient now.

Pharma industry generally appoint C&F Agents as part of their traditional distribution model, which will need to change now. Under GST, the government has chosen to impose tax called IGST not just on the sale, but the movement of goods from one state to another as well. And therefore, with multiple

A lot of discussions and debates had ensued as we all awaited this very new, multi- stage and destination-based, comprehensive tax. And everyone was especially curious as to how this Goods and Services Tax would affect the pharmaceutical and healthcare industry. Our country is the largest producer of generic medicines in the world, and we’ve been ranked 3rd when it comes to the sheer volume of medicines we produce. With no less than 8 different taxes being imposed on the industry, it comes as no surprise that they were looking forward to a uniform taxation. And so, with more or less two months gone by since GST came into force, we’re here looking at how much of the anticipation was actually true.

Before we had GST, we had VAT. With the advent of GST though, the changes are being expected in terms of greater operational smoothness than anything else. Sure, benefits will be seen when it comes to cutting down corruption as well as compliance, but the pharma products belonging to the 5 or 12 percent bracket are unlikely to see a detrimental impact. When we talk about operational smoothness that might be a result of this regime, we mean it because GST will now absorb all the cascading inter-state taxes that one had to pay. Also, it’s a welcome move by the government that healthcare services have been exempted from GST. With inter-state transactions between two dealers becoming tax-neutral, the supply chain of goods is expected to become far more efficient now.

Pharma industry generally appoint C&F Agents as part of their traditional distribution model, which will need to change now. Under GST, the government has chosen to impose tax called IGST not just on the sale, but the movement of goods from one state to another as well. And therefore, with multiple C&F Mother Depots in states, the final tax burden would obviously increase for any company.

Therefore, organizations would instead have to go for, say Mother Depot at selected points. The fact that a Mother Depot would be able to easily function both in and outside a state (without the extra inter-state tax burden), the movement of goods per se would reduce to a great extent. The effective operation of pharma distribution will thus become more streamlined. Also, this will further lead to a reduction in the input cost for the companies. Eventually, it would mean a big tax relief for their end-consumers as well, who are more likely to be patients.

And as we said before, we can now see that the positive effect of GST definitely shows on the overall cost structure of healthcare, but it’s not limited to that. With movement of goods being tracked and taxed, the level of corruption is likely to see a huge fall too.

So the bottom-line is that the ‘one country, one tax’ regime is being deemed appropriate for the economy, and has especially been quite accommodating to the pharmaceutical industry. No doubt that it’s too early to paint the whole picture, but the canvas doesn’t look too bad right now.