The Bangalore District Chemists & Druggists Association (BDC&DA) is disappointed with the National Pharmaceutical Pricing Authority (NPPA) memorandum issued on the notification of ceiling prices of scheduled formulations exclusive of applicable GST rates which was issued on June 9, 2017.
The Association has called upon the Department of pharmaceuticals, NPPA and the Karnataka department of health and family welfare along with the Commissioner of Commercial Taxes that the issue needs to be addressed as the computation is incorrect.
V Hari Krishnan, president, The Bangalore District Chemists & Druggists Association informed that while the effort of NPPA can be appreciated on the computation of ceiling prices on the exact amount of VAT and excise duty, there are certain discrepancies . The object of this move by NPPA was that the general public need not pay more in the guise of the excise duty and VAT.
However, the computation arrived is based on the present existing excise duty and VAT. This is calculated by applying a factor of NPPA’s computation to the existing notified ceiling price which is not correct. In fact this has to be worked out without considering the present excise duty, pointed out Krishnan.
“The GST replaces various indirect taxes such as excise duty, additional excise duty, entry taxes, cess, octroi, state and Union Territory local tax or VAT and other levies subsuming as single tax. There is no need to take the present excise duty into consideration for calculation of revised ceiling prices,” he added.
“We have worked out a calculation of revised ceiling prices, in case if the GST rate is fixed at 12 per cent. Then the ceiling price inclusive GST – MRP is INR 1 and is the same exclusive of GST. Adding GST at 12 percent, the total rate of GST on MRP inclusive is 0.107143 and is 0.892857 exclusive of GST. For GST on MRP exclusive is 0.12 and MRP inclusive would be 1.12, informed the BDC&DA president.
“Therefore GST rates would be calculated by applying a factor of 0.892857 to the existing notified price and added GST of 0.107143 has to be communicated to the central and state finance ministry and the respective departments to collect the exact added taxes prescribed by the NPPA,” said Krishnan.
As on date the exact amount of added taxes and duties were not calculated and communicated to the central ad state ministry/ departments which has caused huge leakage of added taxes in the sale of generic/branded generic drugs where the ceiling prices are fixed on formulations without any definition of the said drugs, he stated.
Therefore the Association is now insisting and has put forth a request to provide an exact amount of GST added on the ceiling price to the finance ministry for making the necessary notification to collect the amount without any leakage, said Krishnan.