Medicine prices are expected to rise after the GST Council set tax rates at 5% for essential drugs and 12% for other formulations.
Impact of GST on Pharmaceutical Prices
The Goods and Services Tax (GST) rates for the pharmaceutical sector, announced on May 23, 2017, diverged significantly from industry expectations. The pharmaceutical industry had hoped for a zero-tax regime; however, the GST Council established a 5% rate for critical, life-saving medications. Other pharmaceutical products and formulations were assigned a 12% tax rate.
This decision meant that medicine prices were anticipated to rise starting from July. Essential drugs, used in the treatment of conditions such as malaria, HIV-AIDS, tuberculosis, and diabetes, were categorized under the 5% bracket. All other medicinal items were placed in the 12% tax category. This information was initially published by the Economic Times.
