The Ayurvedic Medicine Manufacturers Organisation of India (AMMOI) has said the Goods and Service Tax (GST) rates for Ayurvedic medicines, published by the government through newspapers on Tuesday, were misleading. The published GST rates showed that tax on Ayurvedic medicines had come down from 13.1% to 12 %. But the fact is that the tax has gone up from what existed till last month.
AMMOI general secretary D. Ramanathan said here on Tuesday that Ayurvedic medicines were classified into two categories —generic or classical products, and patent or proprietary products. Following the introduction of GST, the tax for the majority of Ayurvedic medicines had gone up, he said.
Dr. Ramanathan said that 95% of the Ayurvedic medicines produced in Kerala come under the generic category. Till June 30 last, these products drew 2% excise duty and 5 % VAT, which amount to a total tax of7% and not 13.1%, as published. The 7% tax has now become 12% under the GST regime and it means a tax hike of 5 percentage points, he said. For small-scale manufacturers who enjoyed a 2% exemption earlier, the tax hike under GST is 7%.
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“Previously, Ayurvedic brews (arishtam) had excise duty exemption and that means 5% VAT. But under the GST regime these products are taxed at 12% and that means a tax hike of 7 percentage points. The drop in tax which the government claims is applicable only to patent or proprietary Ayurvedic products,” he said.
He said that Ayurvedic medicines produced in Kerala accounted for an annual turnover of ₹1,000 crore approximately and out of that about 90% of the turnover comes from generic products. The tax hike has come as a big blow to the Ayurvedic sector which already is facing several challenges for survival, Dr. Ramanathan said.
The published rates which showed that the price for Ayurvedic medicines has come down are misleading. On the contrary, the prices will go up and that poses the threat of badly hitting the prospects of the sector, he added.
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