The chemists and wholesale drug traders across Madhya Pradesh have protested the introduction of Value Added Tax (VAT) raising the slogan that `Tax on medicines means tax on illness'. Protesting against the State government's decision to impose the Value Added Taxes (VAT) in compliance with the Centre's move from April 1, the Indore Chemists Association claimed that the tax would force them to go against the Drug Price Control Order (DPCO) by mentioning the VAT on bills for drugs that are `inclusive all taxes' and traders have called the tax impractical raising several objections in this regard.
In Madhya Prdeash, the state Finance Minister Ajay Narayan Mushran on Monday has declared the imposition of VAT, while tabling the State Budget 2003-04.
The Association have submitted a memorandum to the Madhya Pradesh Commercial Tax Commissioner Vishwapati Trivedi seeking written instructions that `while making bills against medicines which are inclusive of all taxes, VAT should be followed, and that the chemist will not be prosecuted under DPCO'.
``In case of medicines inclusive of taxes, the VAT cannot be mentioned separately. Neither it can be calculated,'' said Association president Subhash Gulati, adding that if the retailer does not mention the same in their bills, as per VAT, no input rebate will be given to the traders.
It is also very strange that under the new provision, the minimum level of tax application has been fixed at Rs 5 lakh annually, which roughly comes to Rs 1388 per day. This means that every chemist of Madhya Pradesh will be covered under this Act.
This level should be enhanced to Rs 50 lakh annually, if at all the VAT is implemented from April, demanded the chemists.
The traders have also objected to the provision in the VAT that the closing stock as on March 31, 2003, (opening stock of April 1, 2003) - of which the commercial tax has already been paid to the government - as mentioned in the VAT Tax Act, the same will be adjusted in five years. It's very strange that it should not be refunded in the very first year itself, said Gulati.
``The tax adjustment of five years, is impractical, unjustified and unwanted for. It can't be accepted at any cost, hence should be reviewed,'' told the Association, to the Commercial Tax Commissioner, in the memorandum.
The Association pointed out that nearby states like the Uttar Pradesh and Rajasthan are not ready to implement the system as yet. ``Then, why the MP Government is in a hurry to implement the same,'' the office-bearers questioned.
The new tax would increase paperwork, apart from reducing the gross profits to the chemists. It seems that the government is trying to copy the advanced countries, as far as taxation standards are concerned, without understanding the Indian conditions, the Association alleged.