Industry & Economy
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Pharmaceuticals
Government
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Policy
Pharma cos in tax-free zone to continue enjoying tax holiday
Nithya Subramanian
New Delhi
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Jan. 12
PHARMACEUTICAL companies that have set up manufacturing bases in the hills of Baddi, Himachal Pradesh, can cool their heels.
The Finance Ministry's recent notification levying excise duty on the retail price of medicaments is unlikely to impact their business plans or bottomlines as they can continue to be benefited by the excise duty exemption.
Senior industry officials told Business Line, "The excise tax holiday in Baddi was not given by the State Government, but through a Central Government notification. So even if excise is levied on the retail price instead of manufacturing cost, these medicaments will continue to enjoy the tax holiday."
Hence, companies setting up manufacturing bases there would be benefited.
Companies were offered sops such as 100 per cent excise exemption for 10 years from the date of manufacturing, income-tax exemption for five years and sales tax levy of just one per cent for 10 years.
Several pharma companies including Torrent Pharmaceuticals, Nicholas Piramal, Unichem Labs, Indoco Remedies and Ind-Swift Ltd are in the process of setting up facilities in the tax-free zone.
With the new excise rule, a section of the industry feels that several large companies could shift their manufacturing to the region. "In such a scenario, the Government could only end up losing excise revenue if companies decide to move to these duty free zones," they said.
However, others were of the opinion that this would not happen since the tax holiday would be available to companies that start manufacturing by 2007.
"It is very difficult to acquire land and set up state-of-the-art, international quality facilities in such a short period," they said.
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