Like several other industries, the pharma industry was waiting with bated breath for the rates at which pharmaceutical products would be taxed under the GST regime which is going to rollout from July 1, 2017. On May 18, 2017, at the conclusion of Day 1 of the two-day meeting of the GST council held at Srinagar, the rate schedule was made public.
Much to the relief of the pharma sector, the rates have been restricted to the category of 12%, with only one product, namely, Nicotine polacrilex gum, being taxed at 18%.
Majority of products would fall under the category of 5% and 12% with the exceptions of contraceptives which would be taxed at zero rate.
In summary, this is the broad structure of rates for the pharmaceutical industry:
GST in India will be levied in a four-tier tax structure of 5%, 12%, 18% and 28% along with zero-rate and exempt categories. There will also be cess on certain products as notified.