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Drugs and medicines are leviable to excise duty on ad valorem basis. Prior to 8.1.2005, excise duty on drugs and medicines was levied on the basis of transaction value ex-factory. With effect from 8.1.2005, excise duty on drugs and medicines is charged on the basis of retail sale price, after providing an abatement of 35% from the retail price. In other words, excise duty is charged on 65% of the retail price declared on the pack. Government have received representations from the manufacturers of drugs and medicines to consider enhancement of the level of abatement provided in view of the special nature of the industry and the presence of large number of small and medium manufacturers.
Taking into account the representations received from the manufacturers and all material facts, the Government has decided to increase the abatement from 35% to 40%. With this change, excise duty on drugs and medicines is leviable at 60% of the declared retail price.
A notification to this effect has been issued today.
BSC/BY/GN-49/05
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