HYDERABAD: An anonymous message doing rounds on social media groups warn citizens of a possible shortage of essential drugs between mid-May and July, ahead of the implementation of Goods and Service Tax (GST) in July. It says that many pharmacists are de-stocking to avoid double taxation.
While it is partly true, chemists in the city maintain that there is no shortage at present-without talking about the coming days.
When contacted, Telangana Chemists and Druggists Association (TCDA), admitted that there could be a reduction in the stocks coming into the market prior to the implementation of GST. This is because the chemists are waiting for clarity on the tax slab for medicines under GST. However, the association assured that there would be no shortage of medicines in the market.
“The Centre has not yet decided on the tax slab for medicines and there is also confusion between Central GST and State GST. More clarity can be expected on Monday after the negotiations between the Central government and the All India Chemists Association (AICA) is done,” said S Venkatapathi, president, TCDA. The message you received was from AICA, but so far no decision has been taken to reduce stocks on ground, he added.
“We were only advised by the AICA to not keep more stock than necessary but enough to meet meet customer requirements. This is because government has tax levies on excess stock which could result in huge losses. Even if stocks are reduced there will be adequate stock of medicines in the market,” said Venkatapathi.
The chemists fear double taxation under the GST regime. Under the present system the retailer pays VAT for the stock he or she has bought. With the implementation of GST, the existing unsold inventory will be brought under the new tax regime.
However the unsold inventory VAT or CST credit will be forwarded to SGST or CGST or Integrated GST and input credit will then get adjusted in the financial year 2017-18. This raises the possibility of double taxation for retailers who had already paid taxes before GST comes into effect.
Venkatapathi added, “VAT for medicines was 5 pc and we would the tax slab under GST to be 5 pc or lower. Anything more could add to the customers’ burden.”