On September 03, 2025, The Goods & Services Tax Council announced the revision in Goods and Services Tax (GST) rates for medicines. The revised GST rates came into effect on September 22, 2025. In this article, we have answered frequently asked questions (FAQs) by retailers about the sale of medicines with revised MRP due to revision of GST.
[If you are short on time, please read response to Q. 4 and 8]
1. Will the revised GST rates apply to stock of medicines already present in the market?
Yes. The reduced GST rates will apply to the stock of medicines already present in the market on or after September 22, 2025, irrespective of the fact that it was manufactured, imported or packed prior to September 22, 2025.
The price of the medicines available in the market on or after September 22, 2025 will have to be reduced to reflect the reduction in GST rates.
2. How will a retailer find out the revised price of medicines on and after September 22, 2025?
The retailer should receive a revised price list in Form V of the DPCO from the manufacturer, importer, or marketer of the medicines, reflecting the reduced MRP due to the revision in GST rates. The Form V contains reduced GST rate applicable to medicine and revised MRP.
3. What if the retailer has not received revised price list (Form V) from the manufacturer or importer of medicines?
If a retailer of medicine has not received revised price list in Form V of DPCO from manufacturer or importer of the medicine, then retailer should sell the medicine at a reduced price, after applying revised GST rate. Please refer to response to Q. 4 for calculation of price at which the retailer should sell the medicine.
4. Can the retailers sell medicines at the same MRP without revising GST rates?
No, retailers must comply with the revised GST rates from September 22, 2025, even if the old MRP printed on the pack of medicine has not changed.
There are two likely scenarios for the retailer:
- If the retailer of medicines has received the revised price list (Form V):
- If the retailer of medicines has not received the revised price list (Form V):
The retailer cannot sell the medicine at old MRP and all medicines must be sold at the revised GST and reduced MRP as is mentioned in Form V.
The medicine still cannot be sold at old MRP that is printed on the pack of the medicine. It will have to be sold at a GST-reduced price, which may be arrived at after applying reduced GST to sum of retailer’s procurement price and retailer’s standard margin for the medicine.
5. If a retailer sells stock of medicines at a price higher then revised MRP, what are the consequences for the retailer?
Retailers selling medicines at a price higher than the reduced MRP can be proceeded against under the applicable GST laws and Essential Commodities Act, 1955 for violation of said laws.
6. Is retailer legally obligated to return stock to manufacturer or importer of medicine for re-labelling with revised MRP?
No. Re-labelling with reduced MRP is not a mandatory legal obligation on the manufacturers and importers of medicines. Therefore, the retailer is not legally obligated to return the stock of medicine for re-labelling. However, if the retailer is returning the stock, it must be done in a phased manner to avoid any shortage of medicines in the market.
7. If the stock of medicine with a retailer has not been re-labelled, is the retailer required to display the revised price list of medicines to retail consumers?
Irrespective of whether the stock of medicines has been re-labelled with revised MRP or not, a retailer should display the revised price list received from the manufacturers or importers of medicines at a conspicuous part of its premises.
8. What are key compliances in relation to revision of GST rates for medicines that a retailer of medicines should be aware of?
A retailer of medicines should undertake the following compliances in relation to the revision of GST rates for medicines on or after September 22, 2025:
- Sell medicines at reduced price after applying revised GST rates (refer to response to Q. 4 for details);
- Verify the revised GST rate and reduced MRP against the revised price list in Form V received from the manufacturer or importer of medicines;
- Display the revised price lists of medicines received from the manufacturers or importers on a conspicuous part of the premises where they carry on business;
- Issue tax invoice with revised GST rates;
- Not alter, tamper, over-sticker or re-label the existing product packaging;
- If reduced MRP has been declared on the package, ensure that both original MRP and reduced MRP are visible and the reduced MRP declaration does not hide or alter other declarations on the package.
- Ensure that there is no shortage of medicines, if stock of medicines is recalled by the manufacturer or importer for re-labelling of reduced MRP.
- Ensure that reduced MRP declaration on the label (if any) has been made in the correct format.
- Ensure that products manufactured or imported after September 22, 2025 declares reduced MRP on the package.
- Do not refuse to sell available medicines to retail consumers.
- Sell loose quantity of medicines at price which is pro-rated to GST reduced price (where Form V has not been received or stock has not been relabelled with reduced MRP) or pro-rated to reduced MRP known to the retailer.
- Update billing systems, including online billing software with revised GST rates effective September 22, 2025.
9. What are the consequences of failure to display the revised price list in Form V of DPCO by the retailers on or after September 22, 2025?
The failure to display price list for medicines in Form V of DPCO will constitute a violation of DPCO and may lead to penal action under the Essential Commodities Act, 1955 resulting in fine and imprisonment.
Disclaimer: This article contains personal views of the authors and should not be considered as legal advice.