GST rate not fixed for food supplements yet – Economic Times
To be sure, the government has reached out to the health ministry for help in categorising nutraceuticals, food supplements, dietary foods and health drinks. Some of these are prescribed by doctors while others are bought over the counter without any need for prescriptions.
“This could be announced in the upcoming GST meet on Saturday,” said one of those cited above. If not, these products may attract the default rate of 28%, which could lead to litigation.
“Health products which have similar composition and usage would tend to be classified on a common basis as it’s difficult for the tax authority to determine whether the product is therapeutic, nutritional supplement, for recuperative purposes etc.,” said MS Mani, senior director, Deloitte Haskins and Sells.
“In the absence of differential classification, based on specific parameters, there is risk of several products attracting GST at the higher rate.”
Pharma and healthcare industry associations, including the Confederation of Indian Industry, had approached the GST Council on May 30 for clarity on the rates for nutraceuticals and food supplements. “We expect clarity on the GST rate for nutraceuticals and food supplements, which they have missed out,” said Sandeep Gupta, vice-chairman, nutraceutical committee (national), Indian Drug Manufacturers’ Association (IDMA).
Large multinational and Indian companies such as Amway, Abbot, Danone, Herbalife, Pfizer, Sanofi, Sun Pharma, IPCA, GSK, DSM, Merck, Mankind Pharma, Nestle, Alkem and others are members of one or the other groups that approached the GST Council.
Energy drinks are also a grey area. According to a 2012 order by the commissioner of trade and taxes (Delhi), Red Bull doesn’t fall in the aerated drinks category. Likewise, vitamins in tablet, powder or liquid form are neither drugs nor food products. Manufacturers say a tax rate of either 5% or 12% should apply to most of these products under GST. “It may not be possible to categorise all these different brands as one product category.
But they may get some clarity soon,” said one of those cited above. The GST Council has set rates for life-saving drugs at 5% and ayurvedic medicines at 12%.
“If GST rates are not declared separately for nutraceuticals and food supplements, then harassment will increase,” said Atul Shah, national secretary, Small Scale Indian Drug Manufacturers Association.
Shah is worried that tax officers will use their discretion to levy GST rates on nutraceuticals and food supplements, which would lead to litigation.
Most nauturaceuticals and food supplements products are available over the counter. These include Revital (Sun Pharma), Nutrilite (Amway), Horlicks (GSK), Complan (Heinz), Bournvita (Mondelez), Resource (Nestle) and others, which people consume voluntarily to derive health benefits.
“Supplements are used for prevention of diseases by staying healthy. It’s not a drug but it ensures a person remains healthy,” said Ganesh Kamath, director, Vital Neutraceuticals. Manufacturers looking to avoid any trouble on the GST front may levy the maximum rate of 28% in the absence of any clarification, thus making products too costly for poorer women and children, hitting the government’s antimalnutrition targets, he said.
The Indian nutraceuticals market is expected to reach $8.5 billion by 2022 from $2.8 billion in 2015, according to a joint study undertaken by Assocham and RNCOS. As per the report, India accounted for a share of around 2% of the global market, which is worth $168 billion as per Frost & Sullivan.
There was no response to queries sent to the finance and health and family welfare ministries. In 2016, the Food Safety & Standards Authority of India came with up with a regulation separating nutraceuticals and food supplements from proprietary food.