KARACHI, Aug 24: Total confusion grips the local drug market as the official notification, issued on Friday to withdraw the controversial 15 per cent general sales tax (GST) on drugs forbids any person to claim or take refund of any amount of sales tax already paid by or recovered from him.

“This notification shall not entitle any person to claim or take refund of any amount of sales tax already paid by or recovered from him,” the notification issued by the Revenue Division of the Finance Ministry on Friday declared in clear terms.

The notification offers a negative list of nine category of items which are exempted from this sales tax withdrawal and would continue to be subjected to 15 per cent GST. These include: filled infusion solution bags imported with or without infusion giving sets, scrubs, detergents and washing preparations, soft soap, adhesive plaster, surgical tapes, liquid paraffin, disinfectants, cosmetics and toilet preparations and absorbent cotton wool.

Rendering the drug operators ineligible of refund of 15 per cent GST has thrown the entire local market topsy turvy. Drug dealers claim of holding one month stock of drugs on which the GST has been paid but would not be refunded according to the notification.

Figures of the stuck-up GST on this drugs inventory varies. It ranges from Rs150 to Rs200 million, which is a pretty good amount and would put the drug dealers into serious liquidity crisis.

The withdrawal of GST, which will definitely prove a relief to the consumers, has somehow led to a war of words between the manufacturers and distributors, wholesalers and retailers over the refund of GST issue.

The chairman, Pakistan Chemists and Druggists Association (PCDA), Mohammad Ilyas Nanitalwala has urged the government to direct the drug manufacturers to refund the 15 per cent GST to the dealers of medicines with immediate effect which was charged earlier on supply and sale of the existing stocks held by retail chemists and wholesalers.

He also urged the finance minister to issue instructions to the Central Board of Revenue (CBR) to refund 15 per cent GST to the importers charged on imported finished medicines to save them from heavy losses.

Ilyas has asked the retail chemists not to charge 15 per cent GST from the public and return such stocks to the manufacturers immediately for replacement with their corrected prices after deduction of levied GST imposed prior to August 22 or the claimed GST may be deducted from their future bills and invoice.

According to PCDA chief, the daily sale of drugs is estimated at Rs400 million which also include Rs100-150 million of drugs with sales tax exemption.

On the other hand, Pakistan Pharmaceutical Manufacturers Association (PPMA) offers a different view on the GST refund issue.

Chairman southern region of PPMA, A. Haseeb Khan told a press conference on Saturday at the PPMA office that the association will ask the government to issue instructions to the wholesalers and distributors not to return such stocks to the manufacturers in anticipation of getting the GST refund.

He recalled that when the GST was imposed on March 21, the market had an estimated inventory of one month costing millions of rupees. Wholesalers and distributors suddenly started supplying the drugs in the market by charging 15 per cent GST despite the fact that the companies had not increased the prices.

Meanwhile, some leading drug manufacturers have informed their distributors that the companies will change and take back the unsold stocks (on which the GST has been paid) with the new stocks of without GST. Some of them are even ready to pay the GST to the retailers and wholesaler. On the contrary, many manufacturers are not ready to offer this gesture.

Consumers are likely to wait at least a week to buy drugs without levy of GST till the issue of refund of 15 per cent sales tax between the manufacturers and chemists/distributors is settled.

Customers are seen demanding the required drugs from the chemists without the levy of GST but shopkeepers say that they do not have new stocks of the companies with price tag excluding GST amount.