GST Cut on Medicines: NPPA Orders Companies to Slash MRPs from September 22
GST Cut on Medicines: NPPA Orders Companies to Slash MRPs from September 22
Move ensures consumers directly benefit from reduced tax rates; relabelling not mandatory, easing industry burden
The National Pharmaceutical Pricing Authority (NPPA) has directed all pharmaceutical manufacturers, marketing firms, and industry associations to immediately pass on the benefits of the recent goods and services tax (GST) rate cut to consumers by reducing medicine prices.
This order follows the Centre’s decision last week to lower the GST on drugs and medical devices from 12 per cent to 5 per cent.
According to the NPPA’s office memorandum, “All manufacturers and marketing companies selling drugs and formulations shall revise the maximum retail price (MRP) of drugs, including medical devices, with effect from September 22, 2025.” Companies have been asked to issue revised or supplementary price lists to state drug controllers, dealers, and the government to reflect the updated MRPs.
In a move that reduces compliance costs, the NPPA has clarified that recalling, relabelling, or restickering existing stock already released in the market will not be mandatory. Instead, firms can ensure compliance by circulating revised price lists and informing retailers through all communication channels about the tax reduction.
Welcoming the decision, Rajiv Nath, forum coordinator of the Association of Indian Medical Device Industry (AIMED), said, “The provision enforces compliance, promotes transparency for consumers, and prevents wastage of packaging material while safeguarding the industry against undue stock losses.”
He further noted that the Department of Consumer Affairs (DoCA) has allowed the use of existing packaging material until December 31, 2025. This, he said, will be particularly beneficial for micro, small, and medium enterprises (MSMEs) as it reduces unnecessary costs and avoids packaging waste.
The NPPA’s directive comes after extensive consultations with pharmaceutical and medical device associations. Industry watchers say the move is expected to bring down medicine costs for consumers significantly, as GST on many drugs has now been reduced from 12 per cent to 5 per cent, while some life-saving medicines have been exempted entirely, moving from 5 per cent to zero GST.
By ensuring MRPs are revised in line with these changes, the government aims to make medicines more affordable without burdening companies with expensive stock recalls or packaging alterations.
