The chemists and druggists across the country have decided to protest against the decision of the central government to include drugs in the general category and slap 12.5 % sales tax as per the value added tax (VAT) system that is to be in place from April 1, 2003. The All India Organisation of Chemists and Druggists (AIOCD), the apex body representing the chemists of the country has called for a nationwide bandh on March 25, 2003 to express their discontentment with the implementation of VAT|.

Speaking to Pharmabiz.com, Sandeep Nangia, organizing secretary, AIOCD and president, Retailers & Distributors Chemists Association of National Capital Territory of Delhi (RDCA) said that AIOCD has requested the government to collect VAT on medicines at the first point on MRP. He however called the fear of double taxation as baseless and said that the reports of declining purchase were due to the absence of clarity among the chemists. According to him, the government has assured that the tax already paid would always be taken into account while introducing any new system.

The AIOCD has already approached the Empowerment Committee on VAT, the Prime Minister of India, Chief Ministers and Finance Ministers of all States and Sales Tax Commissioners requesting them to amend their State Laws with regard to the medicines.

State level associations, affiliated to AIOCD have also taken up the matter with their respective state governments to find an amicable solution to the problem. The chemists are trying to explain to the governments the negative impact of VAT on medicines to the consumer. They feel that the draft rules put for implementation of VAT 2003, are complicated, impractical and detrimental to pharma trade.

AIOCD stand is to make MRP of medicines inclusive of all taxes. They want medicines to be incorporated in the schedule of essential commodity and with maximum 4% Tax all over the country. This will ensure that Medicines are available at a uniform price throughout the country at cheaper price.

As per the proposed VAT regime medicines will be sold to consumers on MRP + local taxes extra which means, the multiple level of taxation on every point of sales would find the medicines 8 - 9% costly to the common man. Another disturbing development is the chances of disparity in the prices of drugs. With the implemention of VAT, TOT and Exempted Retailer, there will be disparity in the prices of medicines i.e., same medicines will be sold at two different prices on the same street, village, city or town. Consumers will have to pay different prices for same medicine in different shops in same/different localities because of the disparity between retailers who have opted for VAT/TOT and exempted dealers.

Recovery of VAT on Drugs and Medicines by TOT/Exempted dealer, Input Credit on Opening Stock and Inventory Record Maintenance are all problem areas for the chemists across the country.

The chemists have asked the centre to modify the DPCO to make the MRP on Drugs and Medicines inclusive of All Taxes as in case of other commodities. Till then the implementation of the proposed VAT regime should be kept in abeyance i.e, status quo to be maintained in the interest of Consumers and suffering humanity, they demand.

Among various memorandums reaching state and central departments, the one forwarded by Andhra Pradesh Chemists and Druggists Association (APCDA) stood apart due to an attempt by the state body to make the authorities aware of the exact impact of VAT on retail prices of life saving medicines. The charts which are part of the memorandum submitted by APCDA before the government of Andhra Pradesh is reproduced below:

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