SERVICE TAX - Capital Market

I ・ GOODS AND SERVICES TAX (GST)BackaroundThe Estimated turnover of Indian Pharma Industry is $9 bil

・ IGOODS AND SERVICES TAX (GST) BackaroundThe Estimated turnover of Indian Pharma Industry is $9 billion. India th ranks 4Globally in terms of volume and is amongst the largest producer of pharma products in the world along with USA, Japan, Europe and China. ● The advantage that India's Pharma Industry enjoys over most other nations is that the cost of labour and overall production is lower in India as compared to other Countries. ● However, the multistage Indirect Taxation Structure [viz Customs Duty on imports, CENVAT on Manufacture, CST /VAT on Sale of goods, Service Tax on provision of Services and levies such as entry tax, octroi, cess by the State or local Municipal Corporations] is one of the Major Obstacle in the Progress of India's Pharma IndustryLevy of multiple taxes, loss of credit of tax paid, compliance and litigation costs associated with the present Indirect tax set up adversely impacts the Pharma Industry &directs affects Global Competitiveness A ・ GST Significant Indirect Tax Reform Since IndependenceA Simple yet Efficient and Transparent Tax System based on the fundamentals of broadened tax base, reduced rate of tax and neutral indirect tax structure forms part of the thought process behind the introduction of GST in India. ● Simply put, GST is amulti-state consumption based value added tax on goods and services. In his Budget Speech, the Finance Minister, reiterated the Governmenfs Structure commitment towards implementation of GST and indicated aconcurrent and dual GST structure for the country. ● IDMA, in principle, supports the introduction of GST. However, there are few suggestions set out hereafter, which needs to be considered. GST should not result in higher tax incidence compared to existing Suaaestions incidence. ● 2% CST on Inter State Transfers should be discontinued so as to reduce transaction costs &enable formulation of Cost Effective Supply Chain Distribution Strategies. ● Agreed Benefits granted to Units set up in Tax Free Zones should be continued under GST. Uniform Exemption need to be granted to Life Saving Medicines under CGST&SGST