The effect of the GST Implementation can be either positive or negative on the Pharma Industry. There may be some new operational modalities to be adopted by the Pharma Industry.
Implementation of GST would increase the price of Drugs and Medicines if the rate of the tax is more than 12%. The Freesamples are going to have a price tag. The transfer of the stock within the organization between the branches interstate would attract the tax by which more working capital is required.
It is expected to be beneficial for Indian drug makers in long run. It would simplify the tax structure for the drug manufacturer. Keeping in view the moto of government to make available the essential medicines and the health care within the reach of common man it may be predicted that the impact may not be much on the Pharma Industry. Service tax Credits would reduce the Cost of Goods sold. There may be some operational issues which in the long run may be eased. Pan India is waiting for the Rates of GSTand the exemptions available.
Like any other commodity, there is a possibility for pharmacy chains, drug makers for a possible price hikes in near future or possibility of stock holds etc. but genetics shouldn’t be effected as is regulated heavily by the Govt.
We at EZTax.in look very positive on GST for many sectors including Pharma to be vibrant in 2 Quarters from the rollout. We also see plenty of opportunity to rationalize, transform the supply chain in Pharma, also to bring fair and transparency in the operations.
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