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Karnataka Ayurveda industry wants GST Council to extend 5% rate to all categories and not just unbranded drugs

Nandita Vijay, Bengaluru
Wednesday, December 6, 2017, 08:00 Hrs  [IST]

The Karnataka Ayurveda industry wants that the GST Council’s recent decision to slash unbranded ayurvedic medicine rates from 12% to 5% needs to be extended to all category of ayurvedic drugs.
The GST Council went on to announce that 177 products were considered for a major levy cut. It was under this that the unbranded ayurvedic medicine rates were also slashed from 12% to 5%. The rates of diabetic food, medicinal grade oxygen, skincare products and a few cosmetic products used for derma, gynae segments were also brought down from 28 per cent to 18 per cent.
According to JSD Pani, president, Karnataka Indian Medicine Manufacturers Association (KIMMA), the industry was hoping for a single slab of 5% on all category of ayurvedic drugs. The small units which were hither to exempted from Central Excise duty were paying 5.5% VAT only. They feel the additional burden of 6.5% to make it 12%.  The units which were paying Central excise duty are not much affected with 12% GST as they were paying 6% Central excise on 75% of MRP and 5.5% VAT.
GST regime thus gives a better tax benefit for the units who outsource the production and packing, pointed out JD Shivakumar, managing director, Ayurpark Health Care.
While The Himalaya Drug Company has a different view on the reduction of the goods and services tax and contends it as a positive move.
“The updated rates under GST will be of great benefit to our consumers. We are currently revising the tariffs of our products across categories in compliance with the GST rate cuts. However, there will be a short transition period before the new price stocks are available in the market. We are committed to provide complete benefits of new norms to our consumers,” said a Himalaya Drug Company spokesperson.
Looking at the positive side of the GST regime, input GST credit being 5% on raw material and 12% on packing material should not burden the Ayurveda industry. In my opinion GST on unbranded Ayurveda drugs may not increase the final price to consumers though the prices may not come down, stated Pani.
“Ayurpark is a service industry. We are not affected by GST rates. However, we charge the Ayurveda manufacturing units using our facility a service tax of 18% on the conversion and packing cost bill.  This also will be input credit for the units along with raw material and packing material GST input credit”, said Shivakumar, managing director, Ayurpark Health Care.
GST regime thus gives a better tax benefit for the units who outsource the production and packing, pointed out Shivakumar.


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Radhakrishna S Dec 7, 2017 2:55 PM
I am happy at least a lone voice being raised in favour of small industry. This is the first government have seen who impose more tags on small industry and Aloe big industry to enjoy tax benefits. Of course naturally they move more towards monopolistic market using tool or passing benefits to the consumer I suspect this is also an agenda of government.
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