Pharmaceutical Sector Calls for GST Alignment for Better Affordability
The Pharmaceuticals Export Promotion Council of India advocates for a unified GST rate on active pharmaceutical ingredients (APIs) and formulations to ensure compliance and efficiency. Currently taxed differently, aligning the rates would simplify procedures and reduce financial stress on the pharmaceutical industry, benefiting patients and the healthcare system.
- Country:
- India
The Pharmaceuticals Export Promotion Council of India (Pharmexcil) has urged the government to harmonize GST rates on active pharmaceutical ingredients (APIs) and finished formulations. Currently, these are taxed at different rates, causing complexities and financial burdens on the industry.
Formulations are taxed at 12%, while APIs face an 18% tax. This disparity creates an inverted duty structure that ties up working capital and causes refund delays, affecting an industry already running on slim margins, according to Pharmexcil Vice Chairman Bhavin Mehta.
To mitigate these issues, Mehta suggested aligning GST rates for both at either 5% or 12% to reduce costs and boost health sector efficiency. He also recommended measures to assist MSMEs, including a fast-tracking refund process and interim financial support.
(With inputs from agencies.)
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