MARKET Overall increase in tax burden will get offset by the improved efficiencies; and pharma companies are likely to absorb the additional tax burden (an estimated net increase of about 1.8 per cent on finished formulations). While the long term outlook remains positive, managing the short term disruption will be critical Amit Mookim General Manager, South Asia, QuintilesIMS
ply chain will happen in an environment of tax neutral interstate transactions. Focus shifting from ‘tax advantage’ logistics planning to ‘strategic location of supply’ logistics planning will lead to higher operational efficiencies. New strategic geographic hubs of pharma manufacturing will emerge as the Central Sales Tax (CST) burden loses its relevance. Overall increase in tax burden will get offset by the improved efficiencies; and pharma companies are likely to absorb the additional tax burden (an estimated net increase of about 1.8 per cent on finished formulations). While the long term outlook remains positive, managing short-term disruption will be critical.” He supports his view by quoting from a survey conducted by QuintilesIMS with distributors and chemists across India to understand their preparedness for GST. “Based on our survey, the on-ground readiness of distributors and chemists to implement GST by July 1 unfortunately remains below par. Pharma companies will need to leverage cross functional participation within the organisation to ensure effective implementation.” According to Cygnet, reconciliation, distribution of data into respective section of GSTR 1 and GSTR 2 and vendor management are the major challenges faced by the pharma companies. Generally, pharma companies have lakhs of transactions a month. Companies have only five days for reconciliation between GSTR 2A and inward supply register, i.e. between 11- 15th of the month. By the 15th of each month, companies need to file GSTR 2 after taking appropriate action. Post July 1, the procedure to take appropriate action like accept/ reject/ modify/hold etc. has changed. Though the return is filed by the taxation department, the purchase department
needs to be consulted in order to decide what action needs to be taken. Each purchase department could have 10-15 different personnel, and identifying which difference belongs to which individual in the purchase department and then take appropriate action is a time consuming activity. It is obvious that this process will not be completed within five days if the number of transactions is huge.
Some solutions But one man's challenge is another man's opportunity. And solution providers like Cygnet ASP have attempted to ease some of these transition hurdles. As Niraj Hutheesingh, Founder Director, Cygnet explains, “The Cygnet ASP solution provides an option (for companies) to push data on GSTN on daily/ periodic basis. They need to request their vendor to also do the same. Once data is available from both ends, even before filing of return, reconciliation can be performed and one can have enough time to resolve differences not only by discussing with the purchase department but also with their vendors in advance.” Explaining further, he said, “Pharma companies have all type of transactions like B2B, B2C > 2.5 lakhs interstate, B2C other transactions, export, debit/credit notes, nil rated, exempted, non GST supply, advance received from customers etc. Slotting outward supply and inward supply data into the respective sections of GSTR 1 and GSTR 2 which consists of around 14 to 17 different sections, is a time consuming activity. Also if proper care is not taken, it may result in errors and amendments or mismatches. To avoid this, Cygnet has automised everything. Cygnet has developed a utility for SAP users through which data is fetched from SAP and pushed to respective section
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EXPRESS PHARMA
21
July 1-15, 2017