Worried over potential losses resulting from disparity between tax payout and tax refund once GST is kicked off stockists have started maintaining low levels of stocks.
Your local pharmacy may soon run dry of medicines as uncertainties cropping up over implementation of Goods and Services Tax (GST) are forcing stockists and trade channels to reduce stocks in trade, reports Times of India.
Worried over potential losses resulting from disparity between tax payout and tax refund once GST kicks in, stockists have started maintaining low levels of stocks. Some stockists have even started returning big chunk of stocks to the companies.
The news, which has already left patients in a frenzied state of mind, is expected to result shortage in shortage of medicines, at least in the short term. Experts, however, suggest there is nothing to panic about and no crisis situation is likely.
"Destocking is a natural fallout of the exercise, so as to minimise unnecessary impact. Lower stocks could be maintained, just enough to serve demand in the market," A Vaidheesh, vice-president (South Asia) and managing director, GlaxoSmithKline Pharmaceuticals, told TOI.
Social media platforms were also abuzz with patients airing their concerns and stockists asking patients to store up their medicines before the “severe shortage” starts from July.Worries of dealers and stockists are justified by the fact that they suffered losses in the past when tax refunds were delayed by the government when the value added tax (VAT) regime was implemented. Hence, stockists may decide to wait it out till they assess the tax refund situation post GST implementation and find some clarity before they replenish their stocks.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.