VAT on life-saving drugs to continue

EPP News Bureau - New Delhi

The government has dropped the move to exempt life-saving drugs from the purview of the value added tax (VAT). They will continue to attract four per cent tax.

While states will have the freedom to make exceptions to this rule for a select list of medicines, the empowered committee of state finance ministers has decided not to notify drugs in the category of goods exempted from VAT.

At its meeting held recently, the empowered committee had resolved to firm up a list of life-saving drugs in the wake of the proposal made by some states to exempt at least some commonly used medicines from VAT.

The panel had also announced the decision to add a small number of items including salt and bread to the original list of 46 items eligible for exemption.

Also, VAT on medical equipment and devices was cut from peak rate of 12.5 per cent to four per cent. But a final decision on the proposal to keep drugs out of VAT could not be taken. ‘‘There will not be further exemptions,’’ Ramesh Chandra, the panel’s member secretary said.