Almost 35,000 wholesale and retail chemists and druggists in Andhra Pradesh will go on a token strike on March 25 in protest against the imposition of Value Added Tax (VAT) on medicines. The strike is in response to the call given by their apex body, the All-India Organisation of Chemists and Druggists (AIOCD).
In a press release issued by Ramesh Chandra Gupta, President, Andhra Pradesh Chemists and Druggists Association, he said VAT which would come into effect from April 1, would mean tax on sickness and would be a big burden on the patients. Medicine was a life-saving commodity and its prices were being controlled by DPCO (Drug Price Control Order) under Section 3 of the Essential Commodities Act, 1955. So medicines should be incorporated in the schedule of essential commodity, with a maximum 4% tax throughout the country. This would ensure that medicines were available at a uniform and cheaper price across the country, he said.
At present medicines were available to the consumers at MRP plus 7 % local taxes, approximately. Under the VAT regime from April1, 2003, there would be tax on every point of sales. Medicines would be sold at MRO plus 16.75% approximately as local taxes. This would mean that medicines would be costly by 8-9% as the tax was on every point of sales on the printed price on the pack.
On the one hand the Central Government was reducing excise duty and other levies on drugs and medicines to make them more affordable to the consumers and on the otherthe government was hiking the sales tax under the VAT from the present 10% at the first point only to 12.5 % at the last point. Medicines were the only commodity which would be sold at MRP plus local taxes, whereas for all other commodities it would be printed on the packs as MRP inclusive of all taxes.
According to Ramesh Chandra Gupta, it would be difficult to collect MRP plus 16.75% from the consumers and therefore he demanded that it should be 'MRP inclusive of all taxes' for medicines as well. He said before the implementation of VAT, the DPCO Act should be suitably amended so that the MRP of medicines was inclusive of all taxes and levies such as octroi, entry tax, cess and surcharges on medicines should be withdrawn and the government should collect VAT at the first stage itself.
Besides, transport of medicines should be quick and free from any hassles so that it reached the destination at the shortest possible time. The Association wanted the checkposts to be abolished under the VAT regime to maintain the cold chain and potency of medicines.