Almost three months have passed since GST Council has reduced tax rate on all medicated dermatology products to 18 per cent from 28 per cent, but the manufacturers are still overcharging the consumers.
Since derma treatments are long duration treatments, overcharging has added woes of patients. They are the sufferers paying in addition to the actual prices of the medicated derma brands which are already very costly.
Taking serious note of this, All India Chemists & Distributors Federation (AICDF) has written to National Anti-profiteering Authority (NAA) urging it to impose penalties on the manufacturers which will force them to return all extra charges to the consumers.
Initially the GST of such cosmetics was 28% except a few (5% of the total brands) were under the regime of 5% GST. After November 2017, most of these cosmetics have come under the GST regime of 18%, a decline of 10% from the earlier rate of 28%.
Despite cut in the GST rate, the manufacturers have not reduced MRP on the products and increased their price to distributor by 10%. It implies that this 10% is getting included with the profit of the manufacturers while distributors profit margin is same as before ‘unchanged’ and proportionate @ 10% of their investment. The profit margin of the retailers are also unchanged, said Joydeep Sarkar, general secretary of AICDF.
The leading derma manufacturers in India are Zydus Healthcare Limited (previously Zydus Cadila), Hegde & Hegde, Curitia, Sun, Cipla, Biophar Lifescience, Healthkind Lab, Novartis, Glenmark and KLM. The market for cosmetic products is 25-30% of the total pharma market in India. As per market statistics medicated cosmetic brands contribute more than 30% of the total average monthly turnover of these corporate houses in every state.
It is noticed that companies are earning Rs 25 lakh to Rs 30 lakh more in addition to their normal business profit in every state by not reducing MRP of their brands post GST rate cut.
No manufacturers are keen enough to circulate the supplementary price lists of their brands through form V abiding the provisions of 24 & 25 of DPCO, 2013, said Sarkar.
It is very much significant that AIOCD and their affiliated regional bodies are getting a copy of such price lists and it implies that with the moral support of that trade body the manufacturers are enjoying large amount of extra profit in lieu of overcharging GST in the prices of cosmetics, he alleged.