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Pharma GST: Input Tax Credit Unlocked!
9 Oct
Summary
- Input tax credit available for free samples starting next fiscal year.
- Tax credit now possible for expired goods upon destruction.
- GST reforms aim to boost pharma liquidity and exports.
Effective from the next fiscal year, pharmaceutical companies will be eligible to claim Goods and Services Tax (GST) input tax credit (ITC) on free samples and on goods destroyed or written off upon expiry. This decision, ratified by the GST Council, is poised to significantly benefit the sector.
The reforms are particularly impactful for industries that routinely handle physician samples, expired inventory, and regulatory disposal. Manufacturers of formulations, vaccines, biologics, and diagnostics will see tangible advantages, as these businesses commonly involve product sampling and require careful inventory management.
This dual-dose GST booster is expected to alleviate working capital challenges, reduce the impact of blocked ITC credits, and minimize disputes. By addressing these long-standing GST issues, the changes aim to improve cash flows for both manufacturers and exporters within the Indian pharmaceutical sector.
