GST 2.0: Medicines to get cheaper from September 22
What's the story
The Indian government has directed pharma companies to revise the Maximum Retail Price (MRP) of medicines, formulations, and medical devices due to changes in the Goods and Services Tax (GST) regime. The revised prices will come into effect from September 22. The National Pharmaceutical Pricing Authority (NPPA) has confirmed that pharma companies are required to pass on the benefits of reduced GST rates directly to consumers/patients.
Compliance requirement
Issuing revised price list is mandatory
The government has asked pharma companies to issue a revised or supplementary price list reflecting the new GST rates and MRPs. This is to be shared with dealers, retailers, State Drug Controllers, and the government. The Ministry of Chemicals and Fertilizers issued this directive as drug pricing and packaging fall outside the purview of legal metrology applicable for FMCG products.
Market compliance
Companies don't have to recall or re-label drugs
The notice from the ministry clarifies that companies don't have to recall, re-label, or restick labels on stocks already released in the market before September 22. This is as long as they can ensure price compliance at the retailer level through other means. The governing body has suggested industry associations could also publish ads in leading national and vernacular newspapers to ensure compliance with revised GST rates.
Tax reduction
GST Council recommends reduction in tax rates for essential medicines
The 56th GST Council Meeting, held on September 3, recommended sweeping changes in GST rates across categories. The council proposed reducing GST rates on major drugs from 5% to nil. Drugs that were previously taxed under the 12% slab have now been shifted to the 5% bracket. This includes medicines used for treating cancer and asthma, which were earlier taxed at a higher rate.