Pharma giants feel afflicted with higher MATThe annual budget has pharmaceutical giants operating from the region irked as government on Monday raised the Minimum Alternate Tax (MAT) to 15%.

MAT is the amount companies pay as tax on their book profits. Reacting to the hike, Pranav Gupta of Parabolic Drugs, said, ‘There is a great deal of contradiction in the tax structure. On one hand, the finance minister is giving huge exemptions and on the other, MAT has been increased, which will directly have a bearing on the income tax.’

The hike, Pranav said, will have a negative impact on research being done in pharmaceutical sector.

‘As it is, our country lags behind in drug discovery and research and development in pharmaceutical sector. This is a retrograde step,’ he said.

There are at least 10 major pharmaceutical companies in Punjab alone and most of these are involved in drug research and discovery. Prominent among these are Ranbaxy, Ind Swift and Parabolic Drugs. Presenting the budget, Mukherjee said MAT was introduced to address inequity in taxation of corporate taxpayers.

‘In the quest for greater equity, I propose to increase the rate of MAT to 15% of book profit from the present 10%, Mukherjee said. ‘Increase in MAT,’ said Harpal Singh, chairman CII northern region, ‘was unexpected and is likely to increase the tax burden on some sections of the industry.’

On the flip side, the pharmaceutical industry cheered at the reduction in basic customs duty on influenza vaccine and nine other specified life-saving drugs used for treating breast cancer, hepatitis-B and rheumatic arthritis. Government has also reduced basic customs duty for two bulk drugs used in manufacturing these medicines from 10% to 5%. Bulk drugs are processed raw materials used in manufacturing the final doses of medicines.

Customs duty will be reduced from 7.5% to 5% on two specified life-saving devices used in treating heart ailments.