Effective September 22, manufacturers and marketing companies must pass on the full benefits of the GST reduction to dealers, retailers, and ultimately consumers.
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JK1991

In a relief to pharmaceutical manufacturers and marketers, the National Pharmaceutical Pricing Authority (NPPA) has clarified that re-labelling or re-stickering drug packs to reflect recent Goods and Services Tax (GST) rate reductions or

Changes is not mandatory, provided these companies ensure price compliance down the supply chain. 

The move aims to prevent potential shortages in essential medicines and medical devices as the industry gears up for the tax benefits effective September 22.

The NPPA has suggested that companies sensitise dealers, retailers, and consumers through all possible channels, such as print and social media advertisements in local languages and ensuring revised GST rates are reflected in sales to avoid overpricing.

The guidelines, notified by the Ministry of Chemicals and Fertilizers’ Department of Pharmaceuticals, on Friday, respond to representations from industry associations seeking clarity on implementing the GST Council’s 50th meeting recommendations from September 2025. 

The council slashed GST rates on several drug formulations and medical devices.

Effective September 22, manufacturers and marketing companies must pass on the full benefits of the GST reduction to dealers, retailers, and ultimately consumers. 

This includes revising Maximum Retail Prices (MRP) for scheduled formulations, including those under the National List of Essential Medicines, and notifying State Drug Controllers.

“It is clarified that re-calling, re-labelling or re-sticker on the label of container or pack of stocks/formulations (including medical devices) is not mandatory for manufacturer/marketing companies, provided they take measures to ensure price compliance at the retailer level,” the notification said. 

This basically means companies need to make sure shopkeepers, middlemen, and buyers, are aware about the new (reduced) GST tax rates.

Possible solutions could be through advertisement in newspapers, TV, radio, and social media including in local languages so people understand clearly.

Other option could be to tell dealers and retailers directly (through meetings, WhatsApp groups, circulars, etc.) that they must sell goods at the new price.

At a customer-end or shopkeeper level there needs to be a double-check that shopkeepers update their price lists so customers don’t get charged extra.

However, firms opting to re-label or re-sticker their stocks may do so, following separate directions issued by the Central Drugs Standard Control Organisation (CDSCO) on September 11 under Rule 104A of the Drugs and Cosmetics Rules, 1945. 

The NPPA emphasized that such voluntary actions should not disrupt market supply, as the CDSCO guidelines already address necessary directions to mitigate shortages.

Industry experts hailed the clarification as a pragmatic step. 

Published on September 12, 2025