GST Authorities Crack Down On Suspected Tax Evasion By Pharma Companies
(MENAFN- KNN India)
New Delhi, Jun 5 (KNN) The Directorate General of GST Intelligence (DGGI) is intensifying scrutiny of suspected tax evasion by major Pharmaceutical companies over alleged non-payment of Goods and Services Tax (GST) dues.
The DGGI has already issued notices to leading drug manufacturers like Sun Pharma, Mankind Pharma, Zydus Healthcare, and Cipla, seeking explanations for perceived under-payment of GST.
The combined tax liability mentioned in these notices is close to Rs 1,000 crore, of which Rs 450-500 crore has been paid so far.
The key issues highlighted in the notices include non-payment of GST on brand transfer sales, claiming fake input tax credit (ITC) on expired drugs and business support services, and non-payment under the reverse charge mechanism.
One major contention is the reversal of input tax credit for expired drugs returned by stockists.
GST authorities argue that when pharma companies write off expired drugs, they should reverse the ITC claimed on raw materials used to manufacture those drugs.
Pharma companies are separately analysing the legality of such notices and have made representations to the government seeking clarity.
If they do not comply with the GST demands, they may face legal actions, including fines and penalties, and are expected to contest these claims in courts.
Experts note that clarity on these issues is crucial to avoid huge litigation involving tax, interest, and penalties for the pharmaceutical sector.
(KNN Bureau)
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