Relief for pharma sector as govt waives mandatory re-labelling of medicines after GST rate cut

GST Rate cuts for Pharma

Drug manufacturers will not be required to recall or re-label medicines already released in the market before September 22, 2025, following the latest revision in Goods and Services Tax (GST) rates. The National Pharmaceutical Pricing Authority (NPPA), under the Department of Pharmaceuticals, has clarified that companies can instead comply by ensuring revised pricing is reflected at the retailer level.

According to the NPPA’s Office Memoranda, “All manufacturers/ marketing companies selling drugs/ formulations shall revise the Maximum Retail Price (MRP) of drugs/formulations (including medical devices). The manufacturers/ marketing companies shall issue revised price list or supplementary price list to dealers and retailers for display to consumers, and to State Drug Controllers and the Government, reflecting the revised GST rates and revised MRP.”

“Recalling, re-labelling, or re-stickering on the label of container or pack of stocks released in the market prior to 22nd September, 2025 is not mandatory, if manufacturer/ marketing companies are able to ensure price compliance at the retailer level,” according to the FAQs issued by the Finance Ministry.

The clarification comes as a significant relief to the pharmaceutical industry, which had expressed concerns over the practical challenges and costs of recalling and re-labelling medicines already in circulation. By permitting revised price lists instead, the government aims to strike a balance between regulatory compliance and business continuity.

The decision is also expected to reduce disruptions in the supply chain, ensuring that patients do not face shortages of essential medicines due to technical labelling requirements. Retailers will now be responsible for displaying the updated price lists, enabling consumers to access medicines at the revised rates without confusion.

The NPPA’s clarification follows recommendations made by the Goods and Services Tax (GST) Council in its 56th meeting held on September 3, 2025. As part of its broader GST rate rationalisation exercise, the Council revised rates on several categories of goods and services, including pharmaceuticals. The NPPA’s intervention ensures smooth implementation of these changes within the drug pricing framework.

Do pharma companies need to recall existing stocks of medicines from the market?

No. Medicines already released in the market before September 22, 2025, do not need to be recalled, re-labelled or re-stickered, as long as retailers comply with revised prices.

What action must manufacturers take to comply with GST rate changes?

Manufacturers and marketing companies must issue revised or supplementary price lists reflecting the revised GST rates and updated MRPs. These must be shared with dealers, retailers, State Drug Controllers, and the government.

How will consumers know the revised medicine prices?

Retailers are required to display the revised price lists so that consumers can access medicines at the correct rates.