The Kerala budget for financial 2003-04 has sprung a few surprises for the pharmaceutical and the medical sector. Life saving drugs has been exempted from VAT, thus bringing down the prices by about 4 to 5 per cent. Life saving drugs was not subjected to any taxes in the last budget too. However, other drugs and formulations would be brought under the purview of VAT thus raising their prices by about 4 to 5 per cent. Drugs and pharmaceuticals in the state attract a sales tax of 16 per cent, the highest amongst the southern state since last budget.

The budget however has imposed entry tax on equipments brought into the state. Accordingly, prices of hospital, surgical and medical equipments are bound to rise.

The budget has no change for the products of the Indian systems of Medicine. Ayurvedic products would be brought under the purview of VAT thus increasing their prices.