Even though nearly two weeks have passed after the GST was introduced, the drug traders are still clueless about the format of invoicing products falling under varied GST tax slabs and the reimbursement of drugs that left unsold either due to expiry or breakage.

Earlier, chemists used to get hundred percent reimbursement on expired and broken products returned to drug manufacturers but there is no clarity on reimbursement of such products post GST. Traders are facing risk of losing refunds, said Suresh Gupta, general secretary of All India Organisation of Chemists and Druggists (AIOCD), a representative body of 8.5 lakh chemists in the country.

The lack of prescribed format for reimbursement of products under GST has also affected the benefits of customers as chemists are no longer able to take back or exchange unconsumed drugs of patients. Before GST, consumers could return drugs that left unconsumed to the chemists and in turn get new drugs or refund. It was a major relief for consumers reeling under rising healthcare expenses, he said.

The market size of the products returned to chemists by consumers stands around Rs. 8,000 crore out of total Rs. 90,000 crore domestic market.

Earlier chemists would get certain quantity of drugs for free from manufacturers on the purchase of certain quantity of stock, e.g. 2 packs free on the purchase of 10 packs. Now chemists can not avail such benefits as they are required to pay GST on each pack, he added.

Varied tax slabs of the pharmaceutical products ranging from 0, 5, 12, 18, 28 per cent have its repercussion on issuance of invoices. Though the government has permitted stockists to issue combined invoices irrespective of varied tax rates of products, the retailers are still uncertain whether they issue invoices of products separately based on their tax slab or issue combined invoices of products falling under various tax slabs, said Gupta.

As per communique issued by the Central Board of Excise and Customs and Commercial Department, the retailers are not required to issue invoice for a transaction worth Rs. 200 to customers. They can issue one consolidated invoice at the end of each day for all transactions done during the day. However, they should issue the invoice where the customer so demands. The communique does not mention about prescribed format for invoices of products coming under different tax slabs.

Upset with lack of clarity over invoice format and reimbursement of unsold drugs, AIOCD has time and again called on drug price regulator, NPPA and GST Council to sort out the issues. So far nothing has been done in this regard, said general secretary of the trade body.

The government has exempted a manufacturer, trader or service provider having Rs. 20 lakh annual turnover in big states and Rs. 10 lakh annual turnover in small states from the registration in GSTN but they are required to get registered for GST if they want to be part of the input tax credit chain. The country has around 2.5 lakh drug stockists and most of them have turnover above Rs. 20 lakh. As of now 90 per cent of drug wholesalers have got registered  for GST. They can avail input tax credit, if the invoices of stock uploaded by them on GST portal match with the invoices of the purchased stock uploaded by retailers.

In order to get input tax credit, the stockists are most likely to sell products to retailers registered for GST. Hence GST registration has become prerequisite for retailers to remain in the business. The GST registration is a major challenge for a significant number of chemists considering the fact that around 60 per cent of 5.5 lakh retailers have not even registered for VAT, he concluded.