Even as the All Kerala Chemists and Drugs Association (AKCDA) claimed that a lot of homework was done before migrating to the Goods and Services Tax (GST) regime, it has been found that stocks are getting depleted in drug stores. “The purchase intake has lessened, but the issue rests not with wholesalers and retailers, but more with manufacturers,” said AKCDA president A.N. Mohan. “It will take at least a month for re-pricing drugs with a new maximum retail price (MRP),” he said.
On the part of the drug retailers handling thousands of brands in a shop, each molecule of the drug stock up to June 30 has to be categorised into five slabs of tax, starting with 0%, 5%, 12%, 18% and 28%. “It is a tedious job, but the association had kept the members informed about methods to be adopted for the migration,” he said.
However, the billing of old stock of drugs under the GST regime had forced most of the drug stores to do away with billing initially. Some of the bigger stores have picked up now. The shift was easier for the bigger stores as they had updated the new software. But, for medium and small retailers, especially in rural areas, billing remains a major problem as the software is unaffordable and unavailable.
Mr. Mohan said the billing problem had affected even those who had a computer as most manufacturers had not shared the Harmonised System of Nomenclature (HSN) code used for drugs. “About 40% of the manufacturers have not provided the marketing network handling the stocks with details that will help them arrive at a post-GST billing,” he added.
A drug store owner in the city said that billing remained a major problem. “We are left to search for the HSN coding on government websites for each molecule, which is not practically feasible while handling a large numbers of customers at the store.”
The first four days of the GST regime were rather harrowing as they had no idea how to get the billing done, said the drug store owner. It was only later that the software on HSN coding of a few companies was made available. There had also been little clarity on who would compensate for the loss a drug retail store would face, the chemist said. With smaller stores fearing major losses, they had not picked up new stock yet.
AKCDA district president P.V. Tomy said that in spite of a 40% credit that the government was expected to provide on double taxation and a loss of 13.5% that the drug sellers were facing, the drug stores were likely to face a net loss of 8.5%.
Officials handling troubleshooting in the Commercial Tax Department said the chemists would face losses on the sale of drugs that had been brought under the National Pharmaceutical Pricing Authority, where the profit margins were rather thin. However, there are many other categories of drugs where the profit margins are very large.
