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The GST 2.0 storm looms over pharmacy retailers handling medicines, nutraceuticals and FMCG which are coming under the Composition Scheme and paying 1% tax on total turnover without input-tax credit.
B Thirunavukkarasu, president, the Bangalore District Chemists and Druggists Association (BDCDA) said the retailers are at a pressure point with the GST 2.0. The real burden falls on retailers, especially those under the Composition Scheme who pay 1% tax on total turnover without input-tax credit. They must sell old inventory at the newly reduced MRPs, absorbing the gap themselves.
In its advisory note for retail pharmacy and dealers, BDCDA chief lauded the efforts of J S Shinde, president, AIOCD, along with other industry bodies such as IPA, IDMA and OPPI which helped to ensure a smooth implementation of GST 2.0 effective from September 22, 2025, safeguarding both the profession and the public. But he cautioned that there is a huge impact on the retail pharmacists.
From September 22, 2025, even as price to stockiest and price to retailer remains at Rs. 64.29 and Rs. 71.43. There is a drastic MRP drop to Rs, 93.75 as against the GST 1.0 which stood at Rs. 100. The huge difference is at 6.25 per cent, he added.
The reality check for the pharmacy trade is that manufacturers remain largely insulated. Recall, re-labelling, or re-stickering is optional. Once a supplementary price list and a public notice is issued, their legal duty is complete, he noted.
Even the wholesalers are also cushioned. Most companies are already extending extra credit days and additional discounts to offset any short-term loss on high-GST stock, he said.
But the nutraceuticals and FMCG are the hardest hit as GST drops from 18% to 5%, creating the steepest margin squeeze. There is a need for practical safeguards. Retailers should seriously consider returning nutraceutical and FMCG stocks to suppliers before September 22, 2025. If returns are not feasible, pharma companies and wholesalers must share the load, either by compensating the margin difference or offering equivalent credit/discounts, Thirunavukkarasu told Pharmabiz.
Inventory purchased at 12% or 18% GST before September 22, 2025 will now be sold at 5% GST. The difference in GST rates will generate additional Input Tax Credit (ITC) in the account books. ITC on stock held at business close on September 21, 2025 remains fully eligible for future utilisation with no ITC loss. PTS and PTR remain unchanged; only the MRP drops, so the tax benefit flows to consumers, especially patients.
Many composition dealers are weighing a shift to the regular GST regime to claim input credit and stay competitive. Yet that move is not simple as about 40% of India’s retail pharmacy trade is unorganised, lacking digital records and compliance setup required for monthly GST returns. BDCDA views it better to stay in the composition scheme and absorb the margin hit, rather than opt for regular GST and face a steep compliance climb, said Thirunavukkarasu.
Therefore, BDCDA now urges the GST Council, State Drug Control Departments, and all relevant enforcement authorities to provide a clear assurance that during this transition period up to December 31, 2025, no retailer or wholesaler shall face any form of penalty, punitive action, or harassment for matters directly arising from the implementation of GST 2.0 and the consequent MRP revisions. Such an assurance is critical to protect the lifeline of community pharmacies and to maintain uninterrupted access to essential medicines and healthcare products for the public, said Thirunavukkarasu.
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