Budget 2018: The Medical Technology Association of India (MTAL), which represents companies such as Bausch & Lomb, Johnson & Johnson, Vygon, B Braun, Abbott Vascular and Becton Dickinson among others, has made a plea that all medical devices be brought under concessional GST rate of 5% from the current rate of 7.3% to lower the cost of healthcare, especially for needy patients. In its pre-Budget memorandum submitted to the finance ministry, the association said it has raised the issue of high GST rates being prescribed on medical devices. For example, 12% GST applicable on orthopedic appliances including crutches, surgical belts and truces; splints and other fracture appliances; artificial parts of the body; hearing aids and other appliances under HSN code 9021 (which used to attract nil rate of CVD) is very high, compared to current embedded tax cost that comes to 6-6.5% under the VAT regime. In the case of contact lens (HSN 9001), where the embedded tax rate under the erstwhile VAT regime was approximately 8.8%, the GST rate has been prescribed at 12%, causing hardships to consumers as the industry is still at a very nascent stage.
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Further, the lenscare solution, a product that is used only for disinfecting contact lens, has been kept under 18% GST rate which is rendering this incompatible to the main product and causing higher cost to consumers. MTAL has recommended to bring contact lenses and lenscare solution under single GST rate of 5%, Sanjay Bhutani, director of MTAL, said. “…Our recommendation is to make healthcare services free of the GST. This can been achieved by zero rating supply to the healthcare services provider,” Bhutani said.
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Further, the cost of demonstrations and free samples, being inherent to the medical devices and implants, are already built into the final selling prices of finished goods that are sold against payment of GST. Therefore, the industry would like to urge the GST Council to exclude demonstrations, free trials and samples from the requirement of input tax reversal. Similarly, the medical device best practices require the manufacturer/distributor, etc, to safely dispose of expired goods to avoid misuse or adverse impact on health of patients.
