All drugs and food for special medical purposes, imported for personal use for the treatment of all rare diseases listed under the National Policy for Rare Diseases 2021, have been exempted from basic customs duty by the central government. The government has also fully exempted Pembrolizumab (Keytruda) used in the treatment of various types of cancer from basic customs duty.
On March 28, Congress leader and Thiruvananthapuram MP Shashi Tharoor shared the story of a young couple who had approached him for an exemption of duty for a drug. It was imported for their young daughter who was suffering from cancer, and they said they were unable to pay a high duty for it.
“They had scrounged and saved and borrowed and crowd-funded to raise the money required but when they imported the drug, they needed an additional Rs 7 lakhs for GST that they could not afford. When they approached me I wrote to Finance Minister Nirmala Sitharaman on March 15 asking her help to exempt them from the GST on humanitarian grounds. When there was no reply they approached me again on Sunday (March 26th); the injection was stuck at Mumbai airport but Customs would not release it without the GST payment.
I called Mrs Sitharaman directly this time. I told her this baby depended on her exercising her authority immediately because the drug was perishable and would expire while in the custody of Customs. She was instantly sympathetic. She hadn’t seen my letter so I re-sent it. Within half an hour her PS, Sernya Bhutia, called to tell me she had spoken to the Chairman of the Board of Indirect Taxes and Customs. Within ten minutes Chairman Vivek Johri called me asking for more documentation. By 7 pm today the exemption was granted,” Tharoor had posted on Twitter on March 28.
In a notification which came into effect on March 30, the exemption has been granted by the Central Board of Indirect Taxes and Customs (CBIC) by substituting “Drugs, Medicines or Food for Special Medical Purposes (FSMP)” instead of “drugs or medicines”.
Now, in order to avail of this exemption, the individual importer has to produce a certificate from the central or state director health services or district medical officer/civil surgeon of the district, a finance ministry release said.
“While exemptions have already been provided to specified drugs for treatment of spinal muscular atrophy or duchenne muscular dystrophy, the government has been receiving many representations seeking customs duty relief for drugs and medicines used in treatment of other rare diseases. Drugs or special foods required for the treatment of these diseases are expensive and need to be imported. It is estimated that for a child weighing 10 kg, the annual cost of treatment for some rare diseases, may vary from Rs 10 lakh to more than Rs 1 crore per year with treatment being lifelong and drug dose and cost, increasing with age and weight. This exemption will result in substantial cost savings and provide much needed relief to the patients,” it said.
Drugs/medicines generally attract basic customs duty of 10 per cent, while some categories of lifesaving drugs/vaccines attract a concessional rate of 5 per cent or nil.
In its meeting in September 2021, the GST Council had reduced tax rates for several life-saving drugs. Life-saving drugs Zolgensma and Viltepso used in the treatment of spinal muscular atrophy were exempted from GST when imported for personal use. At that time, the GST rate for Keytruda was cut to 5 per cent from 12 per cent.
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