The Bangalore Districts Chemists & Druggists Association (BDC&DA) has urged the state government to exempt the pharmacy outlets in the state from filing the Value Added Tax (VAT). It has stated that the VAT has to be collected from the manufacturers before the sale of a drug in Karnataka.
In a memorandum submitted to the Karnataka Commissioner of Commercial Taxes, the Association in its letter Ref.No.1169/12 stated that VAT chargeable on medicinal and pharmaceuticals has to be paid by the manufacturer as per the Drugs Price Control Order (DPCO) before effecting the sale. Hence, the VAT has to be collected from the manufacturers before the sale of a drug in Karnataka, it said.
Association president V Hari Krishnan said that as per the DPCO, the Retail Price is fixed without Excise VAT and other Taxes. It allows actual amount of Excise Duty if paid any on the Retail Price, then VAT has to be charged on the price to arrive on the Maximum Retail Price (MRP) inclusive of all Taxes as per Form V of DPCO to be submitted by the Manufacturer for obtaining the License to the Manufacturer for a Product.
He therefore requested the Commissioner of Commercial Taxes, Karnataka for a breakup of the MRP inclusive of all Taxes which covers the ‘Original Sales Rate + the VAT amount added to arrive MRP inclusive of all Taxes. Any Manufacturer of Packaging Commodity has to give a break-up of the rate is (sale amount +VAT amount added to conclude MRP inclusive of all Taxes).
Hari Krishnan requested the Commissioner to make necessary amendments and collect the VAT amount shown by the manufacturer in his breakup at the first point of sale and exempt the subsequent dealer who cannot claim any input of VAT paid by him on his purchase. VAT also cannot be collected.
Another option by BDCDA was that Manufacturers could be allowed to print the MRP minus the Local Taxes Extra and VAT Act & Rules should be enforced in this case.
As per the section 15 (4) of the VAT Act & rules which refers to Composition Scheme, there is no permit to claim any input packs for Purchases made by the Trader. He is also not allowed to collect Tax on his Sale and has to pay a composition amount of one percent on his total turnover.
Similarly, no Composition Scheme can be allowed to a dealer who is effecting a sale of a commodity which bears MRP inclusive of all taxes. But a Composition Scheme can be allowed to a dealer whose commodity has no price printed on the Pack or with the print MRP Local Taxes Extra.
Hari Krishnan requested the pharma manufacturers should print MRP, Excise amount and VAT amount on the Unit or Pack in the interest of the Consumer where Excise and VAT are paid by the Consumer.