Due to uncertainties with regard to rates and implementation of GST, dealers are expected to reduce their stocks to a few days’ worth.

Stock up on meds Telangana shift to GST may bring shortages in JulyImage for representation
news GST Saturday, June 03, 2017 - 08:34

With the new Goods and Services Tax (GST) regime kicking in at the start of July, chemists in Telangana warn that customers might face a shortage of medicines for a short period of time.

The Telangana Chemists and Druggists Association (TCDA) has suggested that people depending on continued courses of regular medication should stock up on vital medicines to overcome the problem of shortage.

“There will not be a severe shortage, but we are expecting that the GST can affect the demand and supply,” says S Venkatapathi, President of the TCDA.

There are uncertainties regarding the transition to the GST, including the final tax rate on medicines currently taxed at 5%, and the closing of stocks on which VAT has already been paid. As a result, several medicine dealers and retail shops have been planning to reduce their stocks.

“There is a high possibility that tax payouts and tax refunds might not match and we might face close to 7% loss after the implementation of GST from July 1,” Venkatapathi said.

Due to this uncertainty, dealers who usually maintain 40 days worth of stocks, might reduce the stock to 15 days, he said.

“The dealers are afraid of what will happen, we do not know. So we are not taking any risk. They had earlier also suffered losses due to delays in tax refunds, when the value-added tax (VAT) was implemented. Once the rules are clarified, the situation will be fine,” he added.

Venkatapathi said that it will be antibiotics that will be most affected. “People are advised to stock up on antibiotics mostly.”

He added that the TCDA has also been advised by the All India Chemists Association (AICA) not to maintain larger stocks than necessary.

“But there will be enough to meet the needs of the customer in Hyderabad. The government has tax levies on excess stock which could result in huge losses,” he added.

Venkatapathi also said that there is no clarity on what happens with medicines that are nearing their expiry date in the transition to GST.

With the uncertainty growing, some stores in Hyderabad have been sending out messages to their customers to stock up on essential medicines.

“The owner has told us that there might be a shortage of medicines in the coming month. So we have sent messages to customers warning about the shortage and asking them to buy medicines in advance. There can be shortage in the supply of certain kinds of medicines,” said Babu, from the Apollo Medical Store in Begumpet.

 

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