GST Trauma: Chemist Drop medicine storage, Temporary Shortage Likely
New Delhi: Uncertain about the impact of GST on their business, chemists across the country, seem to be turning down fresh inventories ahead of its July 1, 2017 implementation. This inturn has causing a great amount of worry to hospitals and patient alike, who are expected to face an artificial shortage of medicines in the near future.
Indeed uncertainty about the exact impact of the new tax regime is a cause of worry to thousands of chemists. India today reports that chemists had suffered delays in refunds when VAT (value added tax) was introduced, making them now scared of GST regime.
TOI reports that manufacturers may have to bear 2.5% loss on existing stock, traders will incur a 1% to 1.2% loss. "Overall, we'll incur losses of up to 8%, which we can't afford. We have written to manufacturers asking for reimbursement. If not, we will return the existing stock," said Suresh Gupta, honorary secretary, AllIndia Organization of Chemistsand Druggists told the daily.
Maximum Retail Price (MRP) on medicines is inclusive of all taxes, and present prices have been decided on the existing tax regime. Under GST, prices will need go up, but not on existing stocks. "The Centre, last week issued a circular (with a formula) allowing us to increase the MRP by 2.5% from July 1, under GST . On the existing stock, the manufacturers will get input benefit on scheduled drugs, but will have to bear losses on non-scheduled medicines. Despite this, manufacturers will see a loss of 2.5% on existing stock," Indian Pharmaceutical Association president (industrial division) Subhash B Rijhwani .
"We are not buying fresh stocks as there is a confusion about the tax slabs. The stockists and retailers have a week-long stock as such there will not be any shortage.The prices of some medicines will go up and some will be reduced. We are not giving fresh orders till the GST confusion is cleared. However, we have decided to provide medicines on orders and there will not be any shortage,"a Chandigarh Based chemist told India Today.
Indeed uncertainty about the exact impact of the new tax regime is a cause of worry to thousands of chemists. India today reports that chemists had suffered delays in refunds when VAT (value added tax) was introduced, making them now scared of GST regime.
TOI reports that manufacturers may have to bear 2.5% loss on existing stock, traders will incur a 1% to 1.2% loss. "Overall, we'll incur losses of up to 8%, which we can't afford. We have written to manufacturers asking for reimbursement. If not, we will return the existing stock," said Suresh Gupta, honorary secretary, AllIndia Organization of Chemistsand Druggists told the daily.
Maximum Retail Price (MRP) on medicines is inclusive of all taxes, and present prices have been decided on the existing tax regime. Under GST, prices will need go up, but not on existing stocks. "The Centre, last week issued a circular (with a formula) allowing us to increase the MRP by 2.5% from July 1, under GST . On the existing stock, the manufacturers will get input benefit on scheduled drugs, but will have to bear losses on non-scheduled medicines. Despite this, manufacturers will see a loss of 2.5% on existing stock," Indian Pharmaceutical Association president (industrial division) Subhash B Rijhwani .
Owing to the expected losses stocks in retail stores in Bangalore have gone down by 50% . The stores which used to keep a 40-day stock have cut down the period to 20 the report adds. Similar fear appears to be present with chemists across the country.
"We are not buying fresh stocks as there is a confusion about the tax slabs. The stockists and retailers have a week-long stock as such there will not be any shortage.The prices of some medicines will go up and some will be reduced. We are not giving fresh orders till the GST confusion is cleared. However, we have decided to provide medicines on orders and there will not be any shortage,"a Chandigarh Based chemist told India Today.
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