The Delhi-based Retail Distribution Chemist Alliance (RDCA) has sought a three-month transition period to deplete medicine stocks with the old Maximum Retail Price (MRP) in the wake of the reduction in GST rate on medicines from 12% to 5%.

In a letter to Delhi Chief Minister Rekha Gupta, RDCA stated that while a reduction in tax on medicine from September 22 onwards is a welcome step for patients, it will immediately cause financial stress to retail and wholesale chemists due to the heavy accumulation of GST inputs and unsold, higher-cost stock held by pharmacies. The trade body called for a clear mechanism for adjustment of GST input within six months to prevent losses for small pharmacies.

In a separate letter to the pharmaceutical companies, RDCA said the 7% input difference (due to the GST rate reduction from 12% to 5%) cannot be absorbed or adjusted within the next 12 months. The Delhi traders have sought a 30-day additional credit across all purchases during the transition period, and as an alternative, suggested that companies offer a one-time 5% discount on closing stock as of September 21, 2025, or announce special trade offers/schemes on running products to cover losses at retail pharmacies.

“These measures will provide immediate relief to distributors and retailers, enabling them to maintain supply smoothly and in compliance with the new GST framework,”said Sandeep Nangia, president, RDCA.

The letters were necessitated after the GST Council announced a reduction in the tax rates of almost all medicines, medical devices and other healthcare products early this week. The council had reduced the GST rate from 12% to zero on 33 lifesaving drugs and medicines, and from 5% to zero on three other lifesaving drugs and medicines used for the treatment of cancer, rare diseases and other severe chronic diseases. The tax on all other drugs and medicines came down from 12% to 5%.

Similarly, there has been a reduction of GST from 18% to 5% on various medical apparatus and devices used for medical, surgical, dental or veterinary usage or for physical or chemical analysis. Various medical equipment and supplies, such as wadding gauze, bandages, diagnostic kits and reagents, blood glucose monitoring systems (Glucometers), and medical devices, etc., saw their GST rate reduced from 12% to 5%.