GST Pharma Companies: Directorate General of GST Intelligence (DGGI) which works under the aegis of the Ministry of Finance has taken action against many big pharma companies in the country for not filing Goods and Services Tax (GST). The pharma giants included are Dr. Reddys Laboratories, Glenmark, Aurobindo Pharma, Mylan and Cipla, as reported by Zee Business’s Tarun Sharma.

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The aforementioned pharma companies did not pay tax in violation of the rules of section 25 of GST, on which this action has been taken, he added.

DGGI, the investigation branch of the Central Board of Indirect Taxes & Custome (CBIC), conducted a survey on taxation in pharma sector companies, in which it was revealed that these companies had not paid tax since the implementation of GST. Pharma companies did not pay by misinterpreting section 25, Sharma said. 

Which companies owed how much tax?

Investigation revealed that Dr. Reddys had not paid tax of about Rs 130 crore. Apart from this, Glenmark did not pay a tax of Rs 125 crore, Aurobindo Pharma Rs 60 crore, Mylan Rs 20 crore and Cipla Rs 18 crore, he explained.

Companies admit mistake

After the DGGI survey came to the fore about the non-filing of GST, these pharma companies accepted their mistake and paid the outstanding GST. However, after this, the GST department is not only checking section 25. The department is also keeping an eye on many other things, such as some companies sending their medicines abroad, which were rejected by the USFDA. But companies took ITC (Input Tax Credit) on it in the country, which was not refunded, according to Sharma.

What is section 25

According to section 25 of GST, if a company makes any payment from its head office to the branch office, then it has to pay GST on the transfer of more than 20 lakhs. But these companies did not pay tax on transactions above 20 lakhs, Sharma explained.

Companies will remain on the radar of GST even further

After this action of DGGI, these pharma companies are going to be on the radar of GST even further. GST department is now going to see not only their section 25, but other transactions as well, he added.

Market expert Siddharth Sedani said that despite this news, the pharma sector has already hit its bottom, which gives scope for improvement. And in such cases, Cipla has proven to be a good stock.

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