The Hindu Business Line : Kerala druggists on warpath over taxation

THE All-Kerala Chemists and Druggists Association (AKCDA) is on the warpath in protest against a budgetary proposal for shifting medicines to Schedule V of the Kerala General Sales Tax (KGST) Act and introducing a two-stage tax regime.

The association has warned that all wholesale dealers of drugs and chemicals would proceed on an indefinite strike from March 10 if the Government did not withdraw the proposal forthwith. The association would not be responsible for any inconvenience that the strike might cause to the general public, Mr M. Seydu, General Secretary, and Mr A.N. Mohan, President, AKCDA, told newspersons here.

The strike was being called after a number of representations to the tax authorities and the Ministry of Finance failed to elicit any response, they said. The very objective of shifting medicines to Schedule V of the KGST Act will be defeated in view of the fact that as much as 30 per cent of the pharmaceutical business in the State is stocked and sold by hospitals and doctors who do not come under the purview of the Act.

In some cases, the manufacturer sold costly medicines directly to the end user, in which case the Government stands to realise sales tax at the first point of sale only. It is not in a position to collect the tax at the last point.

Currently, the 250-odd first sellers pay up sales tax at 8 per cent immediately after sales on an estimated annual sales figure of Rs 700 crore. As per the new proposal, the sellers will pay up a part of the tax at the first point of sale, but the end seller needs to cough up the remaining 2 per cent only after he sells out the stuff, which can take a year's time.

The new multi-point sales tax regime would mean additional paper and filing work for the 9,000-odd chemists of the State with recorded sales ranging from as low as Rs 500.

The new accounting procedures will demand deployment of additional manpower and extra expenses that would even surpass the rise, if any, in collections.

The association reiterated that the public and the pharmaceutical trade have long been demanding that medicines should be totally exempted from the purview of taxes. But, the association is appreciative of the ground reality and difficulties in fully exempting medicines from the purview of tax, and has placed a request with the Government that tax on drugs may be collected at the first point of sale only.

This will help the trade spare itself of the cascading effect of taxation and discourage the tendency to evade the net.

More Stories on : Pharmaceuticals | Kerala | Taxation

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