Medicine bills from the local medical shop may shoot up a little from Saturday consequent to the rollout of the Goods and Services Tax (GST). Chemists in Mysuru have decided to withdraw the 7% to 12% discount against the total purchase amount.
Most pharmacies in Mysuru have been sporting a placard announcing the withdrawal of the discount on medicines from July 1.
Nagendra Babu of Muruggan Medicals, a leading pharmacy in the city, told The Hindu that it was decided by the association in view of the rollout of the GST and the difference in tax amount that the retailers have to bear while there was no change in their profit margins.
“Earlier we had to pay a Value Added Tax (VAT) of 5.5% on medicines, but under the GST regime the effective tax is 12% and the retailers have to bear an additional 7% increase in tax. Hence the discount on medicines is being withdrawn,” said Mr. Babu. Raghavan, of Raghulal and Co., said that most wholesale dealers tend to have stock to last for at least two months while retainers tend to have 15-days stock of medicines. “This inventory of medicines has been purchased under the previous tax regime with 5.5% VAT. But with GST billing to commence from July 1, the difference in tax has to be borne by retailers on the existing stock and they are bound to incur a loss until the current stock is exhausted. The discount is being withdrawn to offset the loss,” explained Mr. Raghavan.
It is a practice among chemists to have stock to last at least two months as the popularity of the medical shops also hinges on availability of critical medicines. “Besides, it is also critical for patients,” he added.
Another reason for the withdrawal of discount is the lack of clarity on pricing of medicines. This has also led to destocking of some medicines by a few retailers resulting in scarcity.
“But this will resolve once the existing inventory is sold and new stock is purchased under the GST regime,” said Jeevan, secretary, Karnataka Chemists and Druggists’ Association.