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Industry lauds the GST Bill

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Expects it to simplify the tax regime and mitigate the cascading effect of multi-level indirect taxes

Introduction of GST is a welcome move for the entire economy and has been pending since long. As it has been observed in other countries, simplification of tax regime is always a step in the right direction. This will definitely impact the pharmaceuticals industry in a very positive way by impacting the availability of medicines across the country. Overall the logistics cost as well as time needed will go down , which is a big plus in a country like India where reach of healthcare products to rural markets is a big concern. It will have a huge impact on Startup Eco System, As a startup, tax complications are something that you do not want to deal with in your growing phase. Simplification of the tax regime is something that every startup would appreciate and this will help them focus on their core expertise which is running the show. The fine print is yet to come (Nodal agencies/offices / timelines ), however the one expectation that we would all have is super smooth implementation. It will be a massive exercise in itself to ensure that there are enough trained people understanding the changes, hand holding companies for a few days and ensuring that the roll-out is easy and smooth. The intent is brilliant and we would like to congratulate the government on taking this as a topmost priority , the only thing that we need to solve for now is the ‘roll out’.

Dr Dhaval Shah, Co-Founder, PharmEasy

CII welcomes the passing of the Constitution (One Hundred Twenty Second Amendment) Bill 2014 related to the Goods and Services Tax (GST) by the Rajya Sabha today.

GST is expected to remove the cascading effects of various multi-level indirect taxes on goods and services and will subsume most of the country’s central and state level duties and taxes, thus making the country a national market and contribute significantly to the growth of the economy and bring down the overall cost of goods and services. This is indeed the biggest reform in the field of taxes in the country. The sincere determination and the persistent efforts of the government in consensus building and gaining support of almost all political parties in reaching an agreement is indeed commendable.

GST will bring in much needed transparency and higher investments in the coming years and we hope that a few percentage points to India’s GDP will be added through higher tax revenue and investments.

Chandrajit Banerjee, Director General, CIIc

The pharma sector is currently faced with multiple taxes at the central, state and municipal levels; basic and additional customs duties on imports, central excise duty on manufacture, service tax on provision and receipt of services, VAT to name a few. We believe that the Goods and Services Tax (GST) can mitigate the cascading effect of taxes and other anomalies of the present indirect tax structure in the country; it is also expected to streamline and simplify administrative and compliance-related functions that are crucial for a sound operating environment.

GST may also require pharma companies to review (in order to optimise) their distribution strategy and re-work/re-design their networks. Most likely, there will be a need to move to a hub-and-spoke model with primary and secondary hubs across states which could also necessitate an overhaul in the way companies choose their warehousing network with cities like Chandigarh, Lucknow, Guwahati, and Nagpur emerging as primary hubs in addition to the metros.

On the whole, GST is likely to provide an impetus to the sector by rationalising the tax structure and optimising the distribution network. The concern is that rate of GST should be kept at competitive level so that there is no increase in prices of drugs and medicines.

Utkarsh Palnitkar – Partner and Head, Pharmaceuticals & Life Sciences at KPMG in India

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