The Medical Education and Supply wing of the Directorate General of Health Service (DGHS) will be preparing a new list of life saving drugs for the purpose of value added tax (VAT) exemption recommended by the Empowered Committee of State Finance Ministers. The fresh list being prepared by the DGHS will also be considered for the purpose of Drug Price Control Order (DPCO).

The new list of life saving drugs is being prepared as the tax exemption for this category of drugs should be in effect when the VAT is implemented by June 1 in 16 States in the first phase. The Committee, which met in New Delhi on April 23, has suggested exemption of life saving drugs from VAT and also to bring down the same to 4 per cent for all remaining drugs. Following this decision, the Committee has asked Department of Health Services (DHS) to prepare a new list of life saving drugs, which would be uniformly accepted all across the country with 0 per cent VAT.

According to a senior official in the Ministry of Health, the new list of life saving drugs for the tax purpose would be enhanced one by compiling the base list of life saving drugs existing with the Customs for duty exemption purpose and also the essential drugs list adopted in the country as per the WHO guideline.

"However, the new list may not include all the drugs mentioned in both these lists as there will be deletions and also additions in consideration of the rational definition of life saving, essentiality and availability and also the price level," the official said.

Currently, there are around 126 products comprises of drugs and vaccines in the existing list of life saving drugs for the customs duty purpose.