Recommendations for GST Rate re-structure for medicines, API, etc for healthcare sector

There has been an unprecedented surge in the number of COVID19 cases across the country. Improving access to affordable medicines is critical for the fight against the COVID19 pandemic. A complete GST exemption on goods critical for defending COVID-19 products will make such products costlier for patients. GST captures value addition in the mfg chain as manufacturers can claim credit for the taxes paid on inputs. GST exemptions break up the input tax credit (ITC) chain.

Hence, CII recommended the following to the Central Board of Indirect Taxes and Customs (CBIC), Ministry of Finance, and GST Council:

  • Reduce the GST rate on critical COVID-19 materials to 0.1% justified vis a vis GST exemption.
  • Exempt import duty on Remdesivir intermediaries & IGST exemption/ concession on API/ intermediaries/ Formulation.
  • Reduce GST rate for all formulations/ medicines @ 5%.
  • Refund of accumulated inverted duty credit of erstwhile taxes should be provided to pharma companies seamlessly. 
  • Job Work Procedure prevalent under pharma’s loan licenses should be made optional.
  • No reversal of Input Credit is required on Destruction of Date Expired Goods.
  • Allow input tax credit on COVID vaccine used for employees.
  • Allow input tax credit on Physician Samples.
  • Rationalize GST rate for health care services.


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