The government has ordered a reduction in the Maximum Retail Price (MRP) of medicines and medical devices from September 22, 2025. Under the new Goods and Services Tax (GST) Council rates, tax on essential medicines has been reduced to zero, and GST on several medical products has been cut from 12% or 18% to 5%, which will provide relief to patients and consumers.
GST News: The Central Government has ordered a price reduction for medicines, formulations, and medical devices effective September 22, 2025. This move comes after the 56th meeting of the GST Council, where the tax on essential medicines was reduced from 5% to zero, and 33 generic drugs were exempted from tax. Additionally, GST on dressings, adhesive plasters, and other medical products has been reduced from 12% or 18% to 5%. The National Pharmaceutical Pricing Authority has asked companies to update their MRPs according to the new rates and to communicate this information to dealers, retailers, and State Drug Controllers.
Instructions Issued to Companies
The government has instructed all pharmaceutical companies to change the MRP of medicines, formulations, and medical devices from September 22, 2025, in accordance with the new GST rates. The National Pharmaceutical Pricing Authority stated that the benefit of this change will directly reach consumers. Companies have been asked to issue updated price lists or supplementary price lists according to the new GST rates to dealers, retailers, State Drug Controllers, and the government.
No Need to Re-label Stock
The government has clarified that if companies ensure price compliance at the retail level, they will not need to recall, re-label, or apply stickers to the stock available in the market before September 22. The regulator has suggested that industry associations can inform dealers and retailers about the new rates by publishing advertisements in local and national newspapers.
Details of GST Rate Change
The Ministry of Chemicals and Fertilizers has issued a notification. The decision to reduce the GST rate on essential medicines from 5% to zero was taken during the 56th meeting of the GST Council held on September 3, 2025. Under this, approximately 33 generic drugs have become tax-free. These new rates will be effective from September 22, 2025.
Furthermore, bandages, gauzes, dressings, and other medical-related products will attract a 5% tax, which was previously 12%. Additionally, the GST rate on products such as talcum powder, face powder, hair oil, shampoo, dental floss, toothpaste, toilet soap, shaving cream, shaving lotion, and after-shave lotion has been reduced from 18% to 5%.
Impact on Medicines and Medical Devices
The implementation of the new GST rates will lead to a significant reduction in the prices of medicines and medical devices. This will directly benefit the general public. This is particularly good news for patients who require long-term medication. Medical equipment and household health products will also become cheaper.
Convenience at Retail and Dealer Level
This move by the government will also prove to be convenient for pharmaceutical companies and retailers. After updating the price lists according to the new rates, there will be no need to recall or re-label old stock. This will relieve companies of additional costs and ensure smooth supply in the market.
Benefits Directly to Consumers
The benefits of the GST rate cut will directly reach patients and consumers. With reduced prices of medicines and medical devices, expenses in hospitals and clinics will also decrease. Moreover, household health products will also become cheaper, reducing the financial burden on ordinary families.
Widespread Changes and Impact
This policy by the government will bring about widespread changes in the healthcare sector. With the reduction in the cost of medicines and medical products, healthcare services will become more accessible and affordable. Additionally, it will be easier for companies to operate according to the new GST rates.
