The All India Organisation of Chemists and Druggists (AIOCD) has decided to carry out intense lobbying and countrywide awareness campaigns in the coming days to pressurize the Empowered Committee of State Finance Ministers to place medicines in the essential commodity list and thereby ensure preferential treatment in the ensuing Value Added Tax (VAT) based system. The association is to be ready with a common set of demands to be submitted to all state finance ministers by their constituent state bodies across the country. The demands will be prepared keeping in mind the need to have a more or less uniform price structure for drugs all over India.

Speaking to Pharmabiz.com on the sidelines of a meeting attended by all state level leaders of AIOCD constitutents, J S Shinde, General Secretary of AIOCD informed that the apex body representing 5.5 lakh chemists across the country would try to convince all finance ministers on the need to have a special treatment for medicines. "We would see that the demand for exclusion of drugs from VAT and if this is not possible, a reduced tax structure for drugs, would be considered by the Empowered Committee in its forthcoming meeting scheduled on April 23," he said.

The association would also attempting to see a recommendation from the empowered committee to the central government seeking necessary statutory changes in the existing Laws to make the prices of medicine inclusive of all taxes. They point out that that the best way to eliminate the hurdle of price variation of medicines is to amend para 14 and 15 of Drug Price Control Order 1995. Necessary changes in Standards of Weights and Measurement (Package and Commodities) 1977 can also help rationalize the prices they feel.

Meanwhile, the association, through its constituents would reach out to all finance ministers, and impress upon them the practical difficulties associated with the new tax regime on the trade as well as the consumer. Price hikes, disparity of prices, harassment from officials, are all issues that are to follow the implementation of VAT, they fear.

AIOCD has already submitted a memorandum to Asim Das Gupta, the chairman of the empowered committee. The memorandum talks on the need to exempt medicines from VAT, taxation at first point, need to include medicines in the essential commodity list, etc. If at all VAT is implemented the medicines should be taxed 4%, they request.

The association has asked for a rebate of the tax paid on the stocks of 31st March.

It also makes clear that since drug trade is strictly regulated by various authorities and fixed margins, their members whose turnover is more than Rs 40 lakh are getting their accounts audited under section 44-AB of Income Tax Act and submitting their report in 3-CD. The association wants this audit report to suffice all requirements and save their members from dual audits. Withdrawal of provisions for criminal punishments for defaulters and reduction of penalty for minor offences are also demands included in the memorandum.