Companies to ensure lower GST on existing Covid drug stock

Our Bureau New Delhi | Updated on June 16, 2021

Downward change in GST rates should reflect on MRP

National Pharmaceutical Pricing Authority (NPPA) has asked manufacturers and marketing companies related with drugs, formulations and medical devices to revise the Maximum Retail Prices (MRP) based on lower Goods & Services Tax (GST). More importantly, it has asked companies to ensure compliance of lower tax on existing stock.

The GST Council, in its meeting on June 12, decided nil or lower rates of GST for 18 individual Covid relief products. These include medicines, hand sanitizers, pulse oximeters, temperature checking equipment beside others. Accordingly, Finance Ministry issued a notification dated June 14 prescribing nil tax for medicines like Tocilizumab and Amphotericin B, and 5 per cent GST on Remdesvir and Heparin (anti-coagulant). Among other products, 5 per cent GST will be applicable for hand sanitizers, pulse oximeters and oxygen concentrators/generators beside others.

Now, in an office memorandum sent to all manufacturers and marketing companies of drugs/formulations and medical devices, NPPA said that the change in tax/GST rates has an impact on the fixation of MRP of items. Therefore, “any downward change in Tax/GST rates should be reflected in MRP and benefit of Tax/GST reduction should be passed on to consumers.”

Accordingly, it has asked companies to revise the MRP of drugs/formulations based on changes in GST. “Recalling or re-labelling or re-stickering on the label of container or pack of released stocks in the market prior to the date of notifications, is not mandatory, if manufacturers are able to ensure price compliance at the retailer level through issuance of a revised price list,” it said.

Benefit of lower duty of existing stock has become an issue, as there is no clear-cut guidelines for compliance. Now, with this OM, the expectation is that more and more people will get the benefit of lower GST.

Published on June 16, 2021

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