CAAR Mumbai rules bulk drugs and APIs qualify for 5% IGST under Notification No. 01/2017-Integrated Tax (Rate). Clarifies tax rate for critical pharmaceutical imports.
Bulk Drugs, APIs Eligible for 5% IGST: CAAR Mumbai
CAAR, Mumbai, has ruled that bulk drugs and active pharmaceutical ingredients (APIs) are entitled to a concessional IGST rate of 5% under Notification No. 01/2017-Integrated Tax (Rate). The decision settles disputes over higher tax application on essential drug inputs.
The tribunal examined the entries under Chapter 29 and 30 of the Customs Tariff and confirmed that the notification explicitly covers APIs used in formulation. It rejected arguments that only finished formulations qualify, noting the policy intent to reduce drug manufacturing costs.
This ruling benefits pharmaceutical importers by stabilizing tax liability. Practitioners should verify eligibility against the notification and ensure proper documentation. The decision supports government efforts to boost domestic drug production.
Citations
- Integrated Tax (Rate) Notification No. 01/2017