The Central Board of Indirect Taxes and Customs (CBIC) has laid down detailed procedure for returning time-expired drugs or medicines under the Goods & Services Tax (GST) regime. The same procedure can be used for other sectors too, where goods are returned under similar situations.
The common trade practice in the pharmaceutical sector is that the drugs or medicines are sold by the manufacturer to the wholesaler and by the wholesaler to the retailer on the basis of an invoice or bill of supply. After the expiry date, unsold quantities are returned to the manufacturer. Since, taxes are already paid on such medicine, the issue was how to get back taxes paid on unsold quantity under GST regime. The CBIC has now issued a circular detailing the procedure.
Harpreet Singh, Partner at KPMG, said the circular clarifies options available for returning the expired medicines.
As an alternative to issuing a credit note by supplier, the circular clarifies that the return of medicines can also be treated as a fresh supply and effected under cover of tax invoice/ bill of supply, as the case may be.
“The intent of the circular is to validate the common trade practices that exist in the pharmaceutical sector with respect to return of time-expired medicines,” he said.