Budget 2011: OPPI demands rationalisation of excise duty rates of API
The higher rate of duty paid on inputs has led to accumulation of Cenvat Credit in the books as the complete amount of duty paid on inputs cannot be set off against the output tax liability.
By Agencies |
NEW DELHI: Organisation of Pharmaceutical Producers of India ( OPPI) has demanded that excise duty rate of API be rationalized and made at par with pharma goods i.e. excise duty on the inputs (API) may be reduced from 10% to 4%.
OPPI has also suggested that government should introduce a refund mechanism to enable pharma manufacturers to avail refund of excess cenvat credit especially in case of such an inverted duty structure. Introduction of such a mechanism would be relevant because in case the present inverted duty structure continues in GST regime (standard rate of 10% CGST for API and lower rate of 6% CGST for Pharma formulations), the impact of accumulation of Cenvat Credit would continue to be seen on the Pharma sector even under GST regime and the accumulated credit would continue to be cost to the Pharma sector.
The higher rate of duty paid on inputs has led to accumulation of Cenvat Credit in the books as the complete amount of duty paid on inputs cannot be set off against the output tax liability. Further, there is no provision to recover the accumulated Cenvat Credit, which is a cost to such Pharma manufacturer.
OPPI has also suggested that government should introduce a refund mechanism to enable pharma manufacturers to avail refund of excess cenvat credit especially in case of such an inverted duty structure. Introduction of such a mechanism would be relevant because in case the present inverted duty structure continues in GST regime (standard rate of 10% CGST for API and lower rate of 6% CGST for Pharma formulations), the impact of accumulation of Cenvat Credit would continue to be seen on the Pharma sector even under GST regime and the accumulated credit would continue to be cost to the Pharma sector.
The higher rate of duty paid on inputs has led to accumulation of Cenvat Credit in the books as the complete amount of duty paid on inputs cannot be set off against the output tax liability. Further, there is no provision to recover the accumulated Cenvat Credit, which is a cost to such Pharma manufacturer.
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