The Finance Ministry has eased industry concerns by clarifying that recalling or re-labelling medicines already in the supply chain before September 22, 2025, will not be mandatory, following the recent revision of GST rates.
In a set of fresh FAQs issued on Tuesday, the ministry stated that manufacturers and marketing companies are not required to recall or re-sticker packs already released in the market, provided they ensure price compliance at the retailer level.
Clarification on Medicines and NPPA Guidance
The National Pharmaceutical Pricing Authority (NPPA) further directed drugmakers and marketers to issue revised price lists reflecting updated GST rates and Maximum Retail Prices (MRP) to dealers, retailers and state regulators, instead of undertaking costly re-labelling exercises.
Tax experts noted that while the clarification offers relief to the pharma industry, the issue remains unresolved for FMCG and retail sectors, where similar challenges exist. Experts have urged the government to extend clear guidelines on how revised prices should be passed on to consumers for pre-stocked goods without altering the MRP.
Uniform GST on Drones
The FAQs also addressed the rationalisation of GST on unmanned aircraft (drones). Going forward, all drones will attract a uniform 5% GST, compared with the earlier structure where rates varied between 28%, 18% and 5% depending on the drone's configuration. However, tax practitioners pointed out that the FAQs are silent on the settlement of past disputes and whether high tax demands raised earlier by the department would be withdrawn.
Hotel Accommodation
On the hospitality front, the ministry clarified that hotel rooms priced up to Rs 7,500 per unit per day will be taxed at 5% without ITC. Hotels will no longer have the option to pay 18% with ITC for such rooms. Correspondingly, ITC will not be available for related expenses.
Insurance Sector Relief
In a major clarification for the insurance industry, the ministry exempted individual health and life insurance services from GST. Reinsurance services will also be exempted. However, insurers will have to reverse ITC availed on input services like commissions and brokerage since the output supply is exempt.
Delivery Services via E-Commerce Operators
The FAQs also clarified GST applicability on local delivery services offered through e-commerce operators (ECOs). These will attract 18% GST.
- If services are provided by unregistered persons through an ECO, the liability will shift to the operator under Section 9(5) of the CGST Act.
- If supplied by a registered person, whether directly or via an ECO, the tax liability will rest with the supplier.
Importantly, such delivery services will not fall under the definition of Goods Transport Agency (GTA) services, providing long-awaited clarity for last-mile logistics.
Expert View
According to industry experts, these FAQs provide much-needed clarity on GST implications across sectors, especially pharmaceuticals, insurance and e-commerce logistics. However, they also flagged pending gaps in areas such as FMCG pricing compliance and resolution of past disputes in drone taxation.
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