GST & Healthcare Sector: How to be Prepared

Services and goods throughout the country have been levied with multiple taxes at the central, state and municipal levels.Goods and Services Tax (GST)aims at ameliorating this indirect taxation in India. Introduced in 2016, it unifies all the taxes in a single tax —simplifying enforcement, mitigating double taxation, and thereby reducing the overall tax load. This legislation also accelerates Prime Minister Narendra Modi’s Make in India initiative.

Although, it is believed that GST will bring down the manufacturing cost, its impact on the lives of consumers is still being analysed by the industry experts. The rates in the medicines and medical technology products are anticipated to be higher than what prevails now.

Medicine prices will rise about 4% in the new Goods and Service Tax (GST) regime, reports DNA. The source further adds that“pharma companies will pay 80% more taxes on average medicines in the new indirect tax regime, which will ultimately be extracted from consumers”.

Hence, the price of the medicine as well as the tax on it, both would be higher than the existing price. Besides that, any imposition of GST on medical equipment would also affect the overall cost structure of healthcare.Resultantly, pharmaceutical companies may have to assess their distribution strategy and re-work their networks. 

India is welcoming this ‘one country, one tax’ regime in July 2017 and its influence on the healthcare sector is still being contrived. Currently, when 75 percent of India’s population is not covered under the umbrella of health insurance, such a scenario raises major concerns.

Health insurance has thus become almost mandatory to be prepared for the fluctuating costs that strike with this new legislation. A comprehensive health plan will include – hospitalization expenses, medication costs, laboratory test costs and any other medical outlay, hence providingcoverage against all the odds. People who have dependants, spouse, children, parents and/or in-laws, family health insurance plans serve them the best.

With greater operational smoothness and reduced corruption, in the long run, GST would prove beneficial to both, the industry as well as the consumers. But, in the meanwhile, as the country structures through this system we need to make our own provisions. Are you ready for GST?