The National Pharmaceutical Pricing Authority (NPPA) may have to work overtime to revise the ceiling prices of all scheduled formulations, if the proposed plans to print MRP inclusive of all taxes materialize by July 1.The revision becomes necessary as the retail and ceiling prices currently fixed by NPPA are exclusive of local taxes. The Confederation of Indian Pharmaceutical Industry - Small Scale (CIPI) has pointed out this in its representation to the Chemicals and Fertilizers Ministry.
In its observations on the proposed changes meant to have retail prices inclusive of all taxes. CIPI said, "NPPA should issue uniform guidelines for the factorization of divergent local tax structure prevailing today. NPPA should, while revising the ceiling prices consider the 4% VAT levied by VAT compliant states, local sales tax (8%) being levied by States of Uttar Pradesh and Tamil Nadu, surcharges, octroi being levied in the states of Maharashtra, Rajasthan, Orissa, Gujarat, and other states (varying from 1% to 2.5%), entry tax (1%) being levied by states like Orissa and Bihar. The 4% CST levied on all interstate transactions should also be taken into account."
It also noted that the NPPA should come out with a single ceiling price as it is impossible for the manufacturers to print different prices for different states on the labels.
The second issue highlighted by CIPI is the effect of the proposed notification and the 40% abatement for central excise. "At present, excise duty on drugs is levied on MRP after an abatement of 40%. The assessment of duty on a price inclusive of all the taxes will have cascading effect as it will result in payment of duty on that component of local taxes which are included in the printed price. The resultant effect will be the higher price for the patient. This cascading effect needs to be neutralized either by increase in the abatement or by devising a method of assessment so that duty is not levied on the local taxes included in the price. This may require amendment to the Finance ministry notification," CIPI noted. The confederation has also called for more time to implement the proposed amendment and pleaded that the amendment be made applicable to only those batches which are manufactured after the commencement of the order.