Mr. Gupta visits the market and buys the following article: Medicine costing Rs 950, GST@ 5% ; A pair of shoes Rs 3000, GST@ 18 % ; A laptop bag costing Rs 1000 with a discount of 30% , GST@18%. Calculate the total bill amount including GST paid by Mr. Gupta. *
Answers
Answer:
Step-by-step explanation:
he Indian healthcare sector is likely to touch $150 billion by the end of 2017, witnessing an increase of $70 billion since 2012. The Goods and Services Tax (GST) undoubtedly is the most important indirect tax reform measure taken by the Government since our Independence. This is going to be a game-changer for many industries, including Indian Pharmaceutical industry. Nearly 17 federal and state taxes will be replaced with one uniform tax, thereby eliminating the troubles arising out of multiple taxes. This is also going to simplify the process of tax filing and in general the taxation system. Kiran Mazumdar-Shaw, head of India’s leading biotechnology company, Biocon, sees this as the means to rationalise the tax structure and optimize distribution. Reduction in cost of production and distribution will help the industry to pass on the benefits to the buyers.
Healthcare and pharmaceutical industry is one of the leading contributors with respect to revenue and employment and therefore revenues from taxes. GST will subsume various taxes to make it simple and cost effective. Dilip Sanghvi of Sun Pharma also openly applauded the introduction of GST and feels that it will have a positive impact on Indian industry and specifically Pharmaceuticals. Suneeta Reddy of Apollo Hospitals Group sees this as a bold step towards universal health coverage. With ease of doing business in the country with one country one tax and create an equal level playing field for the pharma companies in the country. Ramesh Swaminathan of Lupin Ltd. hopes this will make healthcare more affordable. GST will also encourage local manufacturing sector to step into producing products that will be more affordable for the local consumers. Rekha Ranganathan, of Philips Healthcare Innovation Center takes this as a strengthening move towards our Prime Minister’s ‘Make in India’ initiatives.
Indian Pharmaceutical sector is fragmented and complex with more than 20,000 registered units. There are critical issues like managing perishable items, stopping degradation of medicines, maintaining temperature controlled storage facility etc. make its supply chain even more sensitive to time-bound delivery. This wide supply chain has to be supported with multiple storage locations as well making tax-related issues extremely complex. Marketing and distribution takes nearly 30-35% of the entire value chain.
It has been observed that an efficient SCM can result in an overall reduction of 25-50% reduction in total supply chain costs along with another 25-60% drop in inventory holding and hence cost. This will also result in increased forecast accuracy, better and improved order-fulfillment cycle time and approximately 20%-increase in after-tax free cash flow. Cost of maintaining inventory is estimated to be 10-18% of net revenues. It is also critical to determine optimal inventory levels because of various stochastic variables influencing the supply chain. All these factors will be impacted with the introduction of GST and if industry stalwarts to be believed, in a positive way.
Implementation of GST will result in an efficient supply chain. Inter-state transaction between two dealers will become tax neutral, replacing traditional C&F distribution model. Most of the companies will have to realign their current distribution models by reducing the dependency on multiple states and increasing the focus on regional hubs. This will not only make the process lean and alleviate the complexities involved but will also reduce the SCM cost considerably.
Many pharmaceutical companies currently work on traders-of-goods model in which quite a few services they avail becomes a cost for them with service tax implications involved. But with seamless credit mechanism to be introduced by GST the service tax paid by the companies will come back to them as a refund and in that way saving the cost.
Cascading taxes across different states like Octroi in Gujarat, Maharashtra and Punjab will no longer exist. GST is also going to positively impact the Cenvat because of inverted duty structure faced by the companies now reducing the pressure on working capital and again overall cost reduction that would benefit the end consumers. Inverted duty structure impacts the domestic manufacturers quite adversely where the duty on the inputs (raw materials) is much higher than the duty applicable on the output (finished