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KIMMA sees need for Centre to slash GST across Ayush drug offerings to spur affordability

Nandita Vijay, Bengaluru
Thursday, October 12, 2017, 08:00 Hrs  [IST]

Karnataka Indian Medicine Manufacturers Association (KIMMA) is hoping that the Union government slashes the GST rate for all ayurvedic products without classifying them separately as traditional or classical and branded or proprietary drugs.

The country’s transformational taxation regime which kicked off on July 1, 2017 had the Ayush sector’s small and medium enterprises to going through a serious financial crunch following the allocation of funds to pay the specified levy. The liquidity crunch was detrimental. Going by the fact that almost a large chunk of the Ayush drugs come under the branded category which will continue with a 12 per cent GST, the Association feels that government should have considered this segment also for a rate slash.

In this context, we must appreciate the efforts of Dr D Ramanathan, general secretary, Ayurveda Medicine Manufacturers Organisation of India (AMMOI) who followed up with the Finance Ministry on weekly basis with the representations from various Ayush industry associations. Currently, the move by the government to bring down the GST rate to 5 per cent from 12 per cent is seen to be a big relief. However, we are also looking for a comprehensive reduction across branded drugs going by the wide basket of offering and its huge acceptance in the market, JSD Pani, president, KIMMA, told Pharmabiz.

The GST on Ayurveda products created an affordability crisis. But, measures to bring down the rates on classical Ayurveda products will not spur affordability because the mass consumption is seen in the herbal branded formulations, he added.

It is branded formulations which has changed the face of the Ayush industry not just across the country but internationally too. The branded formulations have undergone efficacy-safety studies on humans. This along with the alluring packaging has provided the much-needed convenience to consumers. The retail marketing channels have also bolstered the growth of these proprietary products. Since the industry has invested time and money to drive growth, the government will need to reconsider the GST levy of 12 per cent on these products and lower the same, said Pani.

With regards to classical formulations, the concern is the quality standards of the small manufacturers and therefore the government should tighten its surveillance on the manufacturing practices of such units.

While the industry lauds the government move to bring down the GST rate post its 22nd meeting last week, which will give a fillip to the manufacturers, the reality so far has been that production has fallen going by the need to adhere to new tax regime for scores of small and medium manufacturers, said Pani.

The government order now states that business less than Rs.1.5 crore turnover could embark on a quarterly filing during the October– December 2017 from the earlier submission for returns every month even if it is not enrolled under GST composition scheme. For the businesses with revenues of over Rs.1.5 crore annually, will file monthly GST returns for July to December 2017, regardless of the annual revenues. “These changes are also expected to provide the much-needed relief to the Ayush drug manufacturers,” noted Pani.

 

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