GST in present form to increase burden on patients: MTaI

New Delhi: The Medical Technology Association of India has voiced its concerns over the proposed implementation of the GST bill by the government. It believes that the new taxation law will eventually lead to increase in the cost of medical devices.

“The medical device sector can expect a higher tax burden due to the proposed GST rates, subsequently resulting in a higher cost burden to the patients,” mentioned Mr Sanjay Bhutani, Board Member, MTaI in a statement on 24th of May.

“Under the current regime, the medical devices category attracts central excise/countervailing duty (CVD) rate of 0% – 12.5%, and the VAT rate for all devices is 5%. Consider two scenarios where a medical device attracts a CVD rate of 0% and 6%, the embedded tax rate approximately comes to 7.5% and 10.7% respectively after considering a central sales tax (CST) @ 2%, VAT @ 5% and Octroi, entry tax etc.,” added Mr Bhutani.

Mr Bhutani further pointed out that the assertion made by those in favor of the implementation of the bill is flawed. He said, “Assertion that medical devices including surgical instruments would have a lower tax burden with GST rate pegged at 12% instead of 13% (which includes 6% CVD and 5% VAT besides the CST, Octroi and entry tax, etc.) is based on a simple addition of all taxes subsumed into GST. This, however, is without considering the fact CVD is levied at the first point (i.e. at the import price), CST on the billing price from the company to the distributor, and the VAT is levied at the last point (i.e. at the value at which the goods are finally sold to customers).”

“The medical devices including surgical instruments, therefore, will roughly have an additional tax burden of 4.5% to 1.3% as per the above two examples,” concluded Mr Bhutani.