FBR may exempt inputs for pharmaceutical products from GST

The Federal Board of Revenue (FBR) is likely to grant exemption from 16 percent general sales tax (GST) on inputs of all pharmaceutical products to ensure uniformity in medicine prices across the country by reducing cost of production. Drug manufacturers had approached the FBR and informed the authorities concerned about the problems faced by the sunrise industry due to imposition of sales tax on import of pharmaceutical products.
FBR Chairman Sohail Ahmad has assured them to remove GST on manufacturing of drugs for granting special relaxation to the industry, sources in the Ministry of Health (MoH) told Business Recorder on Wednesday.
They said that a delegation of Pakistan Pharmaceutical Manufacturer Association (PPMA) had met with the officials in the Ministry of Commerce (MoC), MoH, and FBR, and requested them to allow increase in all pharmaceutical products up to 20 percent due to increase in cost of drug production. FBR Chairman after meeting with the delegation assured them to exempt the industry under the tax net, they added.
"The drug manufacturers in the meeting told FBR that with the imposition of 16 percent sales tax on raw and packing material the cost of medicine production have increased by 8 percent, but the government has refused to allow them increase in prices," sources said, adding that the chairman assured the delegation to grant exemption of GST on such raw and packing material which are particularly used in manufacturing of drugs.
The delegation told FBR that due to devaluation of currency and increase in inflation the cost of medicine production also increased rapidly, but the government decision of constant drug prices across the country has forced the manufacturers to close their units.
Around 60 drug processing units had stopped functioning after the imposition of tax on inputs of pharmaceutical products, which hit hard the industry, they added. It may be mentioned PPMA had also written letters to the Ministry of Finance (MoF) and FBR along with Federation of Pakistan Chamber of Commerce and Industry (FPCCI) to withdraw tax on import of raw material.
The government had not withdrawn GST on inputs of pharmaceutical products even after assurances of Minister Finance Shaukat Tarin and FBR Chairman Sohail Ahmed to make industry tax-free. Talking to Business Recorder, PPMA Chairman Zahid Saeed said the association held two meetings with the FBR chairman last month to remove the sales tax on inputs of pharmaceutical products. "The cost of medicine production would decrease if FBR grant relaxation to the industry," he added.