GST is a reality from the 1st of July 2017. As they say “you can love it, or you can hate it, but you can’t ignore it”; GST is the part and partial of Indian economy. The government has been quite severe and sensitive about the implementation of it, and many steps have been taken to make it more balanced and fairer. According to the Goods and Service Tax, every franchise business is covered under the act. Hence, if you are a business owner of budding pharma franchise India, then it is essential that you gather the required information about GST.
The tax structures and slabs
In the past two decades, the pharma sector has performed exceptionally good. Due to the increasing awareness about health and wellness, and growth in the economy; the industry has outperformed. Amongst various business models, the pharma franchise model is easy to launch and profitable. Since the pharma industry contributes to almost 5 percent of the total GDP in India, it is impossible to ignore it. And more importantly, the substantial chunk of this is added by the small-scale entrepreneurs. In the initial provisions, the tax slabs were Nil, 5,12,18 and 28 percent. However, after consolidation, they are now reduced to Nil, 5 percent and 12 percent. The Zero tax slab is for human blood and contraceptives whereas the majority of the medicines lie in the category of 5 percent. A few drugs that are not included in the prior two classes fall in the 12 percent slab.
Impact of GST
There had been some confusion and distress about GST initially because of the complex nature of the business.
For examples, companies purchase active pharmaceutical ingredients with custom tax favor or integrated GST. Some companies operate in special economic zones. The marketing products, discount schemes or free drug samples have a different impact. They are part of the supply chain. There is a visible impact on MRP or trade value. In some cases, the earlier tax percentage was lesser as compared to the GST applicable now. Thus, the franchise business has to bear a loss. The loss is higher if the medicine falls under 12 percent category. However, it can’t be generalized. In some cases, the GST has come down than the earlier compounded tax slab. Those who want to start PCD pharma company India need to know the tax slab applicable. It helps to do the business planning better.