How GST Will Effect To Pharma Distributors?

How GST Will Effect To Pharma Distributor? – With the government’s introduction of GST and implementation of it from the 1st of July, Indian Pharmaceutical sector is quite busy analyzing its impact. The USD 40 billion pharmaceutical industry is all set to deal with the changing environment of doing business. The complex supply chain and taxation will be at the ease after with the GST but how GST will effect on Pharma distributors and other pharma professionals, who are an essential part of the business in the pharmaceutical, are still a matter of concern.

Indian Pharmaceutical industry has complex multi-stage taxation which involved state tax and central tax but the GST it will be simplified. This will change a lot of things in the industry for the pharma professional. The pharma companies now have to redesign their system, investment, and management in order to bring down the cost. Thus, Impact of GST on pharma distributors and other professionals in important to understand in order to provide a good platform to work together.

GST Effects of Pharma Distributors

Does Pharma Distributors will be effected by GST?

Since the implementation of GST will ease the taxation process for the companies by making the uniform payment of tax. The distribution cost for the companies in expected to drop which will effect the pharma distributors across the country. Post GST implementation the number of the warehouse of the companies in each zone will be reduced than the earlier in order to reduce the tax burden. With the redesigning of the business structure that negative impact can be minimized.

Impact of GST on Pharma Distributors

Many experts believe that the manufacturing cost of the medicines will be reduced with the implementation of GST which will help distributors and MFG to save money.  GST would also improve the operational efficiency by rationalizing the supply chain that could alone add 2 percent to the country’s Pharmaceutical industry. GST would help the Pharmaceutical companies in rationalizing their supply chain; the companies would need to review their strategy and distribution networks.

What Changes will GST bring to the pharmaceutical sector?

GST will definitely change the way we do business in the pharmaceutical sector. Many things will become much simpler than the earlier while for many the pharmaceutical industry needs to improve its entire process or way. Here are the changes that will occur as the GST will be implemented:

  • The tax rate on life-saving drugs which is 5%  is expected to increase. These drugs were used to cure the diseases like malaria, HIV-AIDS, tuberculosis, and diabetes. Presently it was exempted from the excise and customs duties.
  • Post GST 12% tax submission will be on formulations and 18% on APIs (active pharmaceutical ingredients).
  • The way to paying tax will change entirely by eliminating the 8 types of several taxes. Now the pharma companies only have to pay a single tax to the government.
  • GST will reduce the manufacturing cost which great for the buyers
  • It will also reduce the cost of technology used in the pharmaceutical sector. The industry import many advanced machinery and equipment with the introduction of GST it will be reduced which is at present very costly.

 

 

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