Prices of actively used/traded drugs remain unchanged post-GST: NPPA

The NPPA has removed the excise duty and VAT levied on the ceiling price of 761 essential medicines.

Prices of approximately 78% of all actively used and traded drugs would remain unaffected post implementation of Goods and Services Tax.

The country's drug pricing watchdog, National Pharmaceutical Pricing Authority, put up provisional prices using a formula it had worked out on June 9, which cuts the ceiling price of most essential medicines before VAT is added by nearly 5 per cent. The prices of scheduled formulations where no excise duty is currently applicable remain the same, reports EconomicTimes.

The NPPA has removed the excise duty and VAT levied on the ceiling price of 761 essential medicines.

The NPPA has already notified that the revised ceiling price of scheduled drugs, where excise duty is levied on MRP, will be calculated by applying a factor of 0.95905 to the existing ceiling price. This will be exclusive of applicable GST rates.

On the other hand, those scheduled formulations which are exempted from excise duty, their existing notified ceiling price would also be the new ceiling price, exclusive of GST rates, NPPA added.

In the case of non-scheduled formulations, NPPA has said that companies would have no option but to absorb the net increase if prices go up beyond the permissible limit of 10 per cent of MRP due to increase in tax incidence on the GST implementation.

(With agency inputs)