Impact Of GST On Pharma Companies

The impact of GST on Pharma Companies – Do you know the impact of the GST on the Pharma companies? If not, then this is the right place for you. You have to be living under a rock if you have not heard about the much hyped GST in the country. Well, GST has a variety of effects on different sectors depending upon the size of the company. Here we will discuss some of the effects of GST on the Pharma sector.

Impact of GST on Pharma Industry

GST is now no news to anyone, this is one of the biggest change in the tax system of India. Every single sector is expected to be affected in some kind of a way. GST has been into practice from first of the July and people have started to mend their routine according to this new rule. Though the impact on the Pharma industry is still unclear.

What is GST?

GST stands for Goods and services tax. This is an initiative taken by the Indian Government to make the tax structure and system of the country better. GST is an indirect tax that has replaced a variety of state and center taxes applicable in the different places. Now, there will only be a single tax instead of a variety of different taxes in the country. Under GST, goods and services are taxed at the following rates, 0%, 5%, 12%, 18%, 28%. Different sectors will have both positive and negative effects on them.

What is the impact of GST on the Pharma Industry?

It is no news that India is one of the largest producers of the drugs. Indian Pharmaceutical industry is the third largest in the world in terms of volume and 14th in term of the value. The population of India is huge so the demand for drugs and medicines in obvious. The passing of the GST has definitely grabbed the attention of everyone all for the right reasons. GST will ease the taxation system which was earlier way more complicated. The impact of this new rule is still not very transparent. Below listed are some of the effects of GST on the Pharma and Healthcare sector.

  • It is expected that the GST will have a constructive effect on the Pharma industry in a variety of ways.
  • It would help the industries by streamlining the taxation structure since 8 different types of taxes were imposed on the Pharmaceutical Industry back when GST was not into practice.
  • When the taxes will get converted into one uniform structure, then the cascading effects of the manifold tax will also get reduced.
  • GST will alone add 2 percent to the Indian Pharmaceutical industry by reducing the operational efficiencies to the most extent.
  • GST implementation will lead to the flow of a seamless tax system that will make the tax system really easy.
  • One of the major benefits of the implementation of GST is the reduction in the overall cost of the technology.

What would be the major concerns in the Pharma Industry after GST?

There is still an uncertainty whether the lifesaving drugs, medicines, healthcare services etc. would continue to be tax-free. There are different taxes in the very state of different types of drugs that will be changed now as the GST has already in practice. GST is applicable on all the stages of the supply chains. One of the prime concern of the Pharma and healthcare industry is their inverted duty structure. The cost of input is much higher than the output. If this gets changed then this would prove to be the biggest benefits of the implementation of GST.


Though the impact of GST on the healthcare and Pharma industry is still indeterminate,  overall it is a win -win situation for the Pharma Industry. So, if you were looking for the ways how GST will impact the Pharmaceutical industry then I hope this might have been helpful for you. If you are involved in the Pharma sector then it is important for you to know the basic effects of GST.


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