Effect of GST On Pharma Industry /Healthcare Sector – GST is the new talk of the town. The abbreviation GST stands for Goods and Service Tax which is said to be levied from July 2017 all over India. The 122nd Amendment Bill was passed as the Constitution’s One Hundred and Twenty-Second Amendment Act, 2017. It will be affecting numerous industries, businesses, and companies at the same time. The question arises, what will be the effect of GST on Pharma Industry & Healthcare Sector?
The pharma industry occupies a special case owing to the medicinal and pharma requirements it provides. If taken the share of GDP, it contributes to 5% of it. The Government of India with GST Council and its Chairman, Union Finance Minister of India – Arun Jaitley have introduced it so as to increase FDI (Foreign Direct Investment). The change will about some changes in each individual industry. In this article, we will be discussing Impact what will be the effect of GST on Pharma Companies.
GST or Goods and Service Tax is an indirect tax system which takes account consumption done through sale, manufacture, and consumption of goods & services at a national level which mainly involves companies, industries and services sector. The main idea behind it is to abolish the tax levied of state and central government. It involves three stages:
GST involves elimination and combination of thirteen indirect taxes which are as follows:
Only 8 taxes which were levied on pharma will be applicable to pharma industry which is a good news.
GST aborts the cascading effect of the tax which involved multiple taxes applied on only one Product. The costing and taxation system will be simplified with only mountainous of three accounts. It will create a common market for everyone with an equal opportunity towards growth across various states. Due to discontinue of the Central Sales Tax and Interstate transactions between two dealers the Traditional Cost and Distribution Model will get replaced by supply chain efficiencies and tax will become neutral.
With positive, there are some negative effects on the pharma industry:
GST can be good or bad for your company. preparation in advance for the adverse is the thing to do. The key stakeholders such as distributors, associates, suppliers, and buyers and the internal stakeholders i.e. employees should be aware of the plans and progress in every situation which can be forecasted.