The Hindu : New Delhi News : VAT confusion hits medical equipment market

Online edition of India's National Newspaper
Saturday, Apr 09, 2005

New Delhi

New Delhi

VAT confusion hits medical equipment market

By Bindu Shajan Perappadan

NEW DELHI, APRIL 8 . With confusion prevailing over the prices of drugs, the newly introduced Value Added Tax (VAT) regime in the Capital has resulted in an acute shortage of medical and surgical equipment in the market.

Concerned at the developments, the All India Syringe and Needle Manufacturers' Association has written to the Union Finance Minister, the Delhi Government and the VAT Committee Chairman, requesting a uniform tax structure for medical equipment across the country.

According to the letter, the confusion prevailing in terms of price difference on medical devices has led to stoppage of supplies. Traders are now not buying the equipment.

These products include disposable and auto-disable syringes, disposable needles, sterile I.V. sets, blood collection set, scalp vein set, surgical blades and blood bags.

"The Government's intention is to have a uniform tax rate in the entire country under the new VAT regime. Under the rule, while the VAT regime imposes a 4 per cent tax on drugs, medical devices and equipments haven't been notified.

Also, the Delhi Government has not covered medical devices in any schedule list of goods and the same is also not treated in the `others' groups. The rate of VAT for goods under this category is 12.5 per cent,'' said the president of the All India Syringe and Needle Manufacturers' Association, Rajiv Nath.

According to Mr. Nath, for goods in the "other" category there is no uniformity. "A customer will have to pay a 4 per cent charge in Maharashtra, while there is a 12.5 per cent charge on the same equipment in the Capital,'' explained Mr. Nath, warning that if the problem was not sorted out soon enough, the markets would be hit by a serious shortage of medical equipments.

Alleging that the Government was taking little interest in clearing the confusion, causing the shopkeepers not to buy the products at all, Mr. Nath said: "We have requested that rate of VAT should not be more than 4 per cent on all medical devices whether covered in the definition of drug or not which are used for health care and saving of human lives. What we are asking for is a uniform 4 per cent tax on all medical devices and equal rates in all States.''

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