At a time when marketing practices of pharma companies are already under question and government scanner, pharma majors have raised yet another concern with the government. Drugmakers have approached Bombay High Court seeking legal clarity as to whether the free samples and gifts provided by pharma companies to doctors, chemists, etc are business expense or not.
According to sources, pharma companies feel that the free samples and gifts provided by them are to promote sales, part of marketing activities and thus are genuine business expense, for which they should be entitled for input tax credit refund when they file their GST returns.
On the contrary, sources at the Central Board of Indirect Taxes and Customs (CBIC) said the government’s view is very clear — “free samples and gifts are no business expense, they are also part of sales and thus should be considered as sales getting revenue, which is not entitled to any ITC credit.”
The tussle being such that the GST authorities have blocked handsome ITC amount of pharma majors, which they have claimed in their returns.
The matter is now in front of Bombay High Court to assess and come up with the legal solution.
“Notices have been issued to Union of India, Finance Ministry, CBIC and GST authorities to defend their stand,” sources added.
Experts said clarity on this is an urgency as the industry has a good quantum of ITC which is stuck, without sharing the figure.
Source: CNBC TV 18
https://www.cnbctv18.com/business/companies/pharma-firms-bombay-hc-clarity-on-free-samples-gifts-genuine-expense-gst-15700851.htm
https://www.cnbctv18.com/business/companies/pharma-firms-bombay-hc-clarity-on-free-samples-gifts-genuine-expense-gst-15700851.htm
