GST & Income Tax-I
I wonder, whether the GST section and IT section of the Finance Ministry have either thought or worked out a methodology for taking advantage of one another.
While I have respect for the highly educated bureaucrats, I differ with their style of thinking and their mind set.
In this message, I shall only write about the likely chances of Income Tax department taking advantage from their GST counterpart.
I shall give an example of medicines being sold with GST invoices. What all is required, is to make it compulsory for the invoice to have the brand name of the medicine, and also the generic name of the medicine sold under that GST invoice.
About four years ago, during mid 2014, IV injection with the generic name “Meropenem Injection IP 1g” was available under the brand name “Merocrit” manufactured by CIPLA, and had MRP of Rs 2695/=. This IV in many cases is required to be administered thrice a day. It means that the patient would need three bottles of this medicine every day.
However, the same medicine was available under the brand name of “Merotrol” manufactured by Lupin, and had it’s MRP of Rs 899/=.
It means that three doses of brand made by Lupin were available almost for a single dose of brand name of Cipla, when the generic medicine was the same. It was evident, that the MRP of each of this brand had the company profits included.
Hospitals like Lilavati, always used the CIPLA branded medicines, inflating the cost of treatment to it’s patients.
My question is, when CIPLA was selling this one medicine at thrice the cost of the same medicine manufactured by Lupin, surely the profits of CIPLA must have been sky high. Did Income Tax department have any advantage for collecting higher Tax for the same? Or was the extra amounts received due to inflated MRP were used for distributing among some people connected to the hospital?
Was this known to Income Tax, and if so, were some persons from the department also had same advantage like the people from Lilavati?
To summerise, if the GST Invoice has the name of the medicine in generic and branded forms, then the prices for all the manufacturers for each generic medicine sold could be compared to find the anomalies, which may help Income Tax department to improve it’s collections.
Most of the Hospitals have separate Chemist’s shop, from where supplies are sent to the hospital patients, and also outsiders can come an buy medicines from this shop. In such a case, this shop MUST have a separate GST number and should function as an independent entity.
Just a suggestion. If IT department can collect more from such large entities, the burden on salaried middle class shall get reduced. more
While I have respect for the highly educated bureaucrats, I differ with their style of thinking and their mind set.
In this message, I shall only write about the likely chances of Income Tax department taking advantage from their GST counterpart.
I shall give an example of medicines being sold with GST invoices. What all is required, is to make it compulsory for the invoice to have the brand name of the medicine, and also the generic name of the medicine sold under that GST invoice.
About four years ago, during mid 2014, IV injection with the generic name “Meropenem Injection IP 1g” was available under the brand name “Merocrit” manufactured by CIPLA, and had MRP of Rs 2695/=. This IV in many cases is required to be administered thrice a day. It means that the patient would need three bottles of this medicine every day.
However, the same medicine was available under the brand name of “Merotrol” manufactured by Lupin, and had it’s MRP of Rs 899/=.
It means that three doses of brand made by Lupin were available almost for a single dose of brand name of Cipla, when the generic medicine was the same. It was evident, that the MRP of each of this brand had the company profits included.
Hospitals like Lilavati, always used the CIPLA branded medicines, inflating the cost of treatment to it’s patients.
My question is, when CIPLA was selling this one medicine at thrice the cost of the same medicine manufactured by Lupin, surely the profits of CIPLA must have been sky high. Did Income Tax department have any advantage for collecting higher Tax for the same? Or was the extra amounts received due to inflated MRP were used for distributing among some people connected to the hospital?
Was this known to Income Tax, and if so, were some persons from the department also had same advantage like the people from Lilavati?
To summerise, if the GST Invoice has the name of the medicine in generic and branded forms, then the prices for all the manufacturers for each generic medicine sold could be compared to find the anomalies, which may help Income Tax department to improve it’s collections.
Most of the Hospitals have separate Chemist’s shop, from where supplies are sent to the hospital patients, and also outsiders can come an buy medicines from this shop. In such a case, this shop MUST have a separate GST number and should function as an independent entity.
Just a suggestion. If IT department can collect more from such large entities, the burden on salaried middle class shall get reduced. more
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Recently the mosquito menace has increased in Chennai. When I asked for a quote for fixing deterrent mosquito nets over my house windows I found the quote for GST rate was rather high. There's absence of governance in Tamilnadu so we people are suffering and have to rely on ourselves to avoid being afflicted by mosquito borne illnesses. Why should the Central Government prescribe such a high rate of tax for goods which are beneficial to public health and in the interest of epidemic avoidance? It is the same mindset that prescribed tax at over 20 percent for women's sanitary pads. Anything required for basic human health should carry nil tax or minimal tax. Same way while adjudging house tax the government should ensure that no tax or minimal tax is applied on bathroom and toilet areas ( or any other incentive) if they want to discourage open air defecation in our country. These basic amenities should not be treated as luxuries. L.Kalavathi Retd. Bank Official Chennai, Tamilnadu, India 14th March 2018 more
Mar 14
Sir, We all want to pay low or no taxes, but want everything from Petrol, gas , rations etc to be subsidised or given free. We have been literally made beggars by previous governments, and hence this discontent when asked to pay something. Please remember that out of over 120 crores, only 1 crore of us pay taxes; if the tax bracket increases the taxes automatically will come. In the western countries like USA, Canada and EC countries, the tax compliance is very high, so the tax part is comparatively less. We have to make some sacrifices to attain that state. more
Mar 28
Central govt is exploiting common persons like me- Ex. when I renewed my health assurance, for Rs11,00 I have to pay Rs29000, this includes Rs5000 GST. For health insurance do you pay such GST tax, Nonsense, it is nothing short of cheating common people. i purchased a TV ans washing maching machine the cost of it is Rs 59000, for it the GST is Rs16600 and odd. is there any common sense. The modi Govt is exploiting common persons like to the maximum.kantharaj. Retd more
Mar 15
AS everybody knows food/hospitality & medicines are the two lucrative business which earns max profit looting public at large as here there is diff between low & high as people are required to buy medicines & eat only diff is hospitality where it is affluent & middle/lower class (star & without star) more
Mar 06
There are 2 methods of collecting taxes,1. from supplier side& 2. from Consumer. I prefer 1. more
Mar 06
thanks sir for bringing some legitimate facts insight of every one and appriciate your thoughts thanks for writing. The Faith in Govt. has increased now a days since the NAMO led Govt. is in Centre and it has been also observed in may areas where the actions could have been taken in a fraction of seconds by the concerned authorities but was deliberately were not taken in previous all Govt. but we can have some hope that the matter you have raised will catch the eye of some Govt. officical (Beurocrates) the they may also work in this direction more
Mar 05
