GST effect: Druggists reduce stock of medicines

Fearing double taxation the druggists are removing unwanted stock, however they assure there will be no shortage of medicines

GST effect: Druggists reduce stock of medicines
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The Goods and Services Tax (GST) is India’s biggest indirect tax reform, to be implemented from July 1. As an effect of this chemists have started reducing the stock of medicines to avoid double taxation.

“The medicine stock which is not likely to be sold why should we pay double taxes on it? To avoid unwanted losses we are removing the stock which is not being sold since one year or is about to expire. We are just removing expired and old medicine stock. This decision is not going to affect the general public,” said Prasad Danave, President of Retail and Dispensing Chemist Association.

The chemist associations have assured that no such situation (shortage of medicine) is going to arise. We have told people to beware of messages which are misleading public.

Hakim Kapasi, President of north-west chemist association Mumbai said, “There is no need to panic, and no one is going to be affected by our decision. There could be a shortage but for the 10-15 days, but it is not going to affect the market severely”.

There are messages that are being circulating on social media that there could be shortage of medicines between the mid of May to the beginning of July. And many pharmacy retailers are destocking to avoid double taxation. The messages are also telling people to be cautious ensure adequate stock at home if there is any critical ill person in the house.

Currently wholesalers and retailers pay 6 per cent value added tax (VAT) and an additional excise duty on medicines. Prices are adjusted by manufacturers who account for earning of wholesalers and retailers.

The Goods and Services Tax (GST) will replace nearly a dozen central and state levies into a single national sales tax. It will make the movement of goods cheaper and seamless across the country. It would be far simpler than the current system, where a good is taxed multiple times and at different rates.

It is expected to be beneficial for Indian drug makers in the medium to long run as it aims to simplify tax structure and bring operational efficiency.