ISLAMABAD, May 8: The government is considering a proposal to reduce General Sales Tax (GST) rate on medicines from 15 per cent to five per cent, a source told Dawn on Wednesday.

If approved, the five per cent cess will be levied across the board and will also cover 256 life-saving drugs which have been exempted from the tax, he said.

However, the final decision to this effect would be taken at a meeting of the ministerial committee comprising Finance Minister Shaukat Aziz, Commerce Minister Razzaq Dawood and Health Minister Dr Abdul Malik Kasi.

The meeting is likely to be attended by representatives of pharmaceutical companies and different bodies of chemists and druggists. However, time and date of the meeting has not yet been finalized.

Recently, Finance Minister Shaukat Aziz had announced in Karachi that the decision of implementing 15 per cent GST on medicines was under review.

A meeting was held on Wednesday in the health ministry to review the list of life-saving drugs provided by different pharmaceutical companies to the ministry. After analyzing the list, the participants of the meeting were of the view that almost all medicines had come into the category of life-saving drugs. The meeting ended without arriving at a conclusion.

Government analysts have realized that after exempting 256 medicines from GST, the government would not be able to generate a revenue of Rs4-5 billion which it had earlier claimed.

A source said the government could only collect Rs1 to 1.5 billion because all medicines in the list were commonly-used. The medicines on which GST had been levied were not in demand, therefore, the government could not earn much revenue, he added.

The Central Board of Revenue (CBR) chairman, while announcing the 15 per cent GST, had said the revenue so generated would be re-invested in the health sector.

The source said pharmaceutical companies had also been asking the government to reduce import duty on raw material from 10 to five per cent.

The government’s decision to levy 15 per cent GST on drugs had invited adverse reaction from consumer rights and civil society organizations and the public at large.

These organizations had even launched a countrywide anti-GST campaign.

Sensing the reaction, President Gen Pervez Musharraf had formed an inter-ministerial committee to decide and exempt life- saving drugs from 15 per cent GST. Later, the government announced a list of 256 medicines and exempted them from the cess.

However, this decision also failed to tone down the reaction, and even All Pakistan Chemists and Druggist Association announced a countrywide strike on April 25 against the GST. The strike was later called off after the finance minister assured the chemists to resolve their grievances.