GST Reform: NPPA Directs Drug Makers to Pass on Benefits Through Revised MRPs from Sept 22

The National Pharmaceutical Pricing Authority (NPPA), under the Ministry of Chemicals & Fertilizers, Department of Pharmaceuticals, has issued an Office Memorandum (F. No. 12(24)/2021/1DP/NFPA/Div.II(Vol.II)-Part(1)) mandating the implementation of revised Maximum Retail Prices (MRPs) for medicines, formulations, and medical devices, effective from 22nd September 2025, in light of the recent Goods and Services Tax (GST) rate rationalisation announced during the 56th GST Council meeting.

Key Highlights

• The GST rates on drugs/formulations, including medical devices, will be reduced starting 22 September 2025.
• All manufacturers and marketing companies are instructed to pass on the benefit of reduced GST to consumers/patients from that date.
• These companies must revise MRPs accordingly. MRPs printed with the old rates must be updated via revised or supplementary price lists (Forms V/VI) and communicated to dealers, retailers, state drug controllers, and the government.
• It is not mandatory to re‐label or re‐sticker products already in the market before 22 September, 2025, provided revised MRPs are publicly communicated. However, manufacturers may opt for phased re-labelling or re-sticker-ing so long as it does not cause drug/medical devices shortages.
• Manufacturers and industry associations are directed to use all communication channels-print, electronic, social media-to inform stakeholders (dealers, retailers, consumers) of the changes.

Official copy of the Memorandum is as follows

The undersigned is directed to refer to the recent Government decision on rationalization of GST rate structures as recommended in the 56th meeting of GST Council, wherein, inter-alia, the Council has recommended reduction in the GST rates on drugs/formulations (including medical devices) effective from 22nd September, 2025. Representations have been received from the manufacturers/marketing companies and industry associations seeking clarification/guidance on issues of implementation.

In this regard, following directions are issued:

• The benefit of reduction in GST rates shall be passed on the consumers/patients effective from 22nd September, 2025.
• All the manufacturers/marketing companies selling drugs/formulations shall revise the MRP of drugs/formulations (including medical devices) accordingly w.e.f. 22nd September, 2025.
• The manufacturer/marketing companies shall issue revised price list or supplementary price list, in Form V/VI to the dealers, retailers, State Drug Controllers and the Government reflecting the revised GST rates and Revised MRP.
• Manufacturer/marketing companies shall take immediate measures to sensitise dealers/retailers/consumers about reduction in GST rates through all possible channels of communication including electronic, print and social media. Industry associations may also release advertisements in leading national newspapers including vernacular newspapers to reach out the dealers/retailers to ensure compliance of revised GST rates w.e.f. 22nd September, 2025.
• It is clarified that rescheduling, 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 revised prices are communicated to the public to ensure compliance with revised GST rates.
• However, the manufacturer/marketing companies who desire to re-label or re-sticker the stock available in the market, may do so in a phased manner so that it does not cause shortage of drugs/formulations (including medical devices) in the market. In this regard CDSCO has already issued necessary directions on 11.09.2025 under Rule 104A of the Drugs and Cosmetics Rules, 1945 (copies enclosed).