New Delhi, Sep 16 : The recent GST rate cut pharma relief has brought significant respite to the pharmaceutical industry, as the government has waived the mandatory requirement for manufacturers to recall or re-label medicines already in the market. This move follows the GST Council’s revision of medical device taxes from 12% to 5%, ensuring smoother compliance and minimizing disruption in the supply chain.
The Department of Pharmaceuticals clarified that companies can now comply by updating the revised pricing at the retailer level instead of physically re-labelling stocks. According to the National Pharmaceutical Pricing Authority (NPPA), manufacturers and marketing companies must revise the Maximum Retail Price (MRP) of drugs and medical devices, issue a supplementary price list to dealers and retailers, and ensure the updated rates are displayed to consumers and communicated to State Drug Controllers.
“Recalling, re-labelling, or re-stickering of products already in circulation is not mandatory if manufacturers ensure compliance through retailer-level price updates,” the NPPA stated.
This decision is expected to reduce logistical and financial burdens for pharma companies while preventing potential shortages of essential medicines for patients. Retailers will now play a key role in displaying revised price lists, ensuring transparency and clarity for consumers.
The Association of Indian Medical Device Industry (AiMeD) welcomed the move and urged the government for further GST reforms. The industry highlighted ongoing challenges such as working capital pressures, inverted duty structures, and restricted refund eligibility.
AiMeD recommended simplifying the GST refund process to include Input Tax Credit (ITC) on services and capital goods, implementing a uniform 5% GST rate on inputs, and introducing automated, time-bound refunds with 90% provisional payments. The industry pointed to global practices in Australia, New Zealand, Canada, and the EU, where unused GST/VAT on inputs, including services, is fully refundable or carried forward, easing cash flow constraints for exporters and businesses.
Rajiv Nath, Forum Coordinator of AiMeD, emphasised that such reforms could strengthen the Make in India initiative, lower healthcare costs, and enhance the global competitiveness of India’s pharmaceutical sector.
With these changes, the government ensures smooth compliance for pharma companies while prioritising uninterrupted access to affordable medicines for consumers across the country.
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