look news india
The Directorate General of GST Intelligence (DGGI) has tightened the scope of investigation against pharma companies found to be evading taxes. Apart from the notices already issued, the DGGI may ask many more companies to explain what would be considered as underpayment of tax by them in the current year. The notices have been sent to major pharmaceutical companies like Sun Pharma, Mankind Pharma, Zydus Healthcare and Cipla, the official concerned said. One thing common in these notices is the issue of input tax credit reversal for expired medicines. When medicines are sent to the stockist they usually come with an expiry date. If the stockist fails to sell the quantity of the medicine before the specified date, such expired medicines are sent back to the pharma companies, which withdraw the product from their books. GST officials argued that in such a case, when the quantity of the medicine is written off, the input tax credit on the raw material used by the pharma company for this medicine should be reversed. The notices may relate to non-payment of GST on brand transfer sales, claiming bogus input tax credit (ITC) on expired medicines and business support services, and non-payment under the reverse charge mechanism. The tax liability mentioned in all these notices could be close to Rs 1,000 crore and Rs 450 crore to Rs 500 crore has been paid by pharmaceutical companies so far. The payments made so far are for the financial year 2022-23 and financial year 2023-24. More such notices will be issued by DGGI in the current financial year.
bitter medicine
A common issue in the notices is the issue of input tax credit reversal for expired medicines
Notice has been sent to major pharmaceutical companies like Sun Pharma, Mankind Pharma, Zydus Healthcare and Cipla
Combined tax demand from pharma companies will be Rs 1,000 crore
