New GST Regime Lowers Cost of Drugs, Devices

The new GST regime, the government has instructed pharmaceutical companies to rework the maximum retail price (MRP) of drugs, formulations, and medical devices from September 22, 2025. National Pharmaceutical Pricing Authority (NPPA) has indicated that the reduction in the rate of GST should be passed on to consumers and patients.

Pharma companies are requested to send revised or supplementary price lists to dealers, retailers, State Drug Controllers, and government authorities. In addition, manufacturers and marketers have been given the responsibility to inform the trade, the retail sector, and consumers of the changes by means of electronic, print, and social media campaigns immediately.

The message to the companies is that they should not be involved in the recall or re-labeling of stock, which was distributed before September 22, as long as they have ensured compliance at the retail level through other means. The associations of the industry have been given the assignment to become more visible by placing ads in both national and local newspapers to draw more attention to the issue.

Also Read: Cotec Healthcare IPO Launches with DRHP Filing

The decision of the latest GST Council Meeting on September 3, 2025, is the immediate precursor to the current development. The Council resolved that GST on major drugs be reduced from 5% to nil; those that had been taxed at 12% would now be at 5%.

In the future, these products will attract a 5% GST. The rate will drop from 12% to 5%. Simultaneously, the Congress and asthma medicines have been also moved to the 5% slab from 12%. The new GST rate on shampoo, soap, hair-oil and toothpaste is 5%, down from 18%, thus giving a big relief to consumers.