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BDCDA demands rational GST reform in pharma; calls for ‘One Nation, One Tax’ at 7% on MRP
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Nandita Vijayasimha, Bengaluru
August 29 , 2025
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The Bangalore District Chemists and Druggists Association (BDCDA) is now pressing for rational GST reform in pharmaceuticals and calls for ‘One Nation, One Tax’ at 7% on MRP.
What was originally designed as the Maximum Retail Price (MRP) has, in practice, devolved into a Manipulated Retail Price. This unchecked trend reflects a dangerous shift: ‘Business on Greed & Greed on Convenience’, a system that should represent trust is increasingly being reduced to manipulation, exploitation and risk, said B Thirunavukkarasu, president, BDCDA in a communication to the Union Finance Minister Nirmala Sitharaman.
A levy of 7% GST on MRP will be a reform for transparency, fair trade and national public health. Currently, GST on medicines is levied on the discounted transaction value, creating scope for manipulation. Artificial discounts as high as 80–90% are routinely offered, misleading patients and depriving the exchequer of legitimate revenue. Ethical chemists face unfair competition from such practices, while the sanctity of MRP is reduced to a ‘Manipulated Retail Price.’ A uniform 7% GST on printed MRP will eliminate this distortion, restore fairness, and simplify compliance.
Medicines, including life-saving drugs, antibiotics, injectable, anti-cancer drugs, and surgical products/syringes, lies outside the purview of Drug Price Control Order. This has allowed manufacturers to inflate MRPs by 400–599%, only to sustain the illusion of discounts. GST levied on discounted values hides this profiteering, creating a double blow, inflated MRPs for patients and tax losses for the government. By levying GST directly on MRP, manufacturers will be compelled to print realistic MRPs, dismantling the cycle of artificial inflation, he added.
The inflated MRP and discounted GST model has created fertile ground for counterfeiters to infiltrate unsafe medicines into the supply chain. With the rise of quick commerce and 10-minute delivery platforms, many such products bypass regulatory checks. A GST-on-MRP regime removes the incentive for falsified MRPs, strengthens supply chain integrity, and curbs counterfeit infiltration, said Thirunavukkarasu.
Large retail chains and online platforms advertise discounts of 80–90%, sustained only by inflated MRPs. BDCDA filed a complaint seeking a suo motu investigation into psychologically misleading advertisements on social media, which exploit patients and distort fair competition. Implementing GST on MRP will end to discount wars, restore fair pricing, in alignment with CCI’s Competition Commission of India’s vision of healthy competition, he noted.
A GST-on-MRP regime curtails the profitability, brings it under compliance, and ensures patients receive medicines through transparent and accountable trade practice.
Noting that generics is the misleading promise of affordability, Thirunavukkarasu said, “Generics projected as ‘low-cost medicines’, often carry margins exceeding 1000%, with fake discounts masking profiteering and shrinking GST collections as taxes are applied on manipulated transaction values. Enforcing GST on MRP will dismantle this cycle of exploitation, and compel realistic pricing, and ensure that affordability is genuine.”
A GST-on-MRP framework removes the financial incentive for such malpractice, safeguarding both public health and the stability of the pharmaceutical trade ecosystem. The present GST system divides medicines into slabs of 0%, 5%, 12%, and 18%. Here 0% covers 4% of medicines, 5% covers 9% of medicines, 12% covers 82% of medicines and 18% covers 5% of medicines.
Therefore, our request is to reduce the 12% slab to 7% on MRP of medicines and increase the 5% slab to 7% on MRP of medicines. There is a need to abolish multiple slabs and bringing a uniform 7% GST on MRP on all medicines, said the BDCDA president.
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