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NPPA order mandates revision of MRPs after GST cuts; re-labeling voluntary, not mandatoryThe NPPA has directed drug manufacturers to revise MRPs in line with GST rate cuts, ensuring the benefit reaches consumers. While re-labelling or recalling old stock is not mandatory, companies must issue revised price lists to maintain compliance and transparency.By Timsy Jaipuria   September 12, 2025, 10:35:55 PM IST (Published)4 Min ReadThe National Pharmaceutical Pricing Authority (NPPA) has issued an order directing all drug manufacturers and marketing companies to revise the Maximum Retail Price (MRP) of medicines on which Goods & Services Tax (GST) rates have been reduced, so that the benefit of tax cuts flows to consumers.

However, the NPPA clarifies that recalling, re-labelling or re-stickering of already released (unsold) stock is not mandatory, and may be undertaken on a voluntary basis, provided certain conditions are met.

Which consumer protection experts, who did not wish to be quoted, flagged as a major loophole.

Key Provisions of the Order

Revision of MRP whenever GST/tax rates decrease

“All the manufacturers and marketing companies are required to revise the MRP of drugs/formulations on which Tax/GST rates have been reduced, taking into effect the revised rates of Tax/GST,” says the order

What this means: Whenever the government lowers the GST or other tax/duty on a medicine, its MRP (which is inclusive of all taxes under the Drugs (Prices Control) Order, 2013 (DPCO)) must be reduced accordingly. The benefit is to be passed on to the consumer through reduced MRPs.

Re-labelling / re-stickering / recall of released stock is not compulsory

“Recalling or re-labelling or re-stickering on the label of container or pack of released stocks in the market prior to the date of notifications, is not mandatory, if manufacturers are able to ensure price compliance at the retailer level through issuance of a revised price list,” says the order.

What this means: Companies do not have to physically change labels or stick new stickers on all existing stock in warehouses or retail shelves. Instead, if they issue a revised price list (which reflects the new, lower MRP) that reaches retailers and state regulators, that suffices for legal compliance. This avoids logistical burden and waste.

Legal basis: DPCO 2013 and inclusive pricing

Under the Drugs (Prices Control) Order, 2013, the MRP of drugs and formulations is inclusive of applicable taxes and duties.

Because of this, any downward change in taxes (such as GST or basic customs duty) must lead to a downward revision of MRP.

Communication to stakeholders

Manufacturers are required to issue a revised price list (or supplementary price list) to dealers, State Drug Controllers, and the government.

In earlier similar orders, NPPA emphasised that information about the price change must also be submitted through prescribed formats (“Form II / Form V”) and communicated to regulatory authorities.

What the Order Does Not Require / Important Clarifications

No mandatory re-labelling or recall: As noted, physical alteration of packaging of already released stock is optional and only required if the manufacturer prefers; the key is price compliance.

MRP inclusive of taxes: Because MRPs already include taxes, the calculation of revised MRP is simply the old MRP minus the reduction in tax component.

Voluntary physical changes (stickers, etc.) only if desired or needed: Companies may choose to use stickers, re-labelling, or other packaging corrections for unsold stock, but this is not compulsory.

Impact & Relevance

Consumer benefit: Patients will be able to buy medicines with reduced MRPs. This could reduce out-of-pocket expenditures, especially for “scheduled formulations” (those specifically regulated under the DPCO).

Industry flexibility: The order gives pharmaceutical companies some leeway — they need not physically re-label inventory, which can be costly and time-consuming. Issuing a revised price list suffices legally.

Regulatory clarity: The NPPA has reaffirmed its interpretation of DPCO and past practice in similar situations (e.g., past tax rate changes or customs duty reductions) to avoid confusion.

Why such an order?

These measures come in the wake of a broader rationalisation of GST rates, effective from 3 September 2025, where taxation on many medicines and medical devices has been reduced (for instance, from 12% GST to 5%, or from 5% to nil for certain life-saving drugs). NPPA’s order ensures that those rate reductions are reflected in consumer prices under the legal framework.

The Association of Indian Medical Devices Industry (AiMeD) has welcomed the government’s decision to allow the use of existing packaging material until 31st December 2025, following GST rate revisions.

Calling it a “timely and pragmatic step,” Rajiv Nath, Forum Coordinator of AiMeD, said the move addresses key operational challenges faced by retailers, manufacturers, importers, and distributors.

“The provision ensures compliance, consumer transparency, and prevents wastage of packaging material while also safeguarding the industry against undue stock losses. We appreciate that the Government has struck the right balance between protecting consumer interests and supporting industry ease of doing business,” he stated.

AiMeD further highlighted that the allowance would provide significant cost relief, particularly to small and medium enterprises.Continue ReadingCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsGSTgst rate cutNPPA