Thinking what will happen to Pharma Products Prices after GST ?

After the implementation of GST since July 1st, 2017 there are so many question hurling around us. There are different answers from different sources which further creates confusion.

So to solve this confusion to a great extent, we have started this post series on GST mainly related to Pharma Industry. This is the fourth Post on this Series. First Three Were:

  1. How will GST Effect Pharma Products?
  2. Opening Stock Tax after GST
  3. Price to Retailer And Price to Stockist Rate Calculations After GST

If you are not clear about the Basics of GST (Goods & Services Tax) then you can go through first post briefly.

Will the Prices of Pharma Products increase or decrease ?

As we all know that prices of  pharma products affects all people in the pharma industry to a great extent, so this is the biggest question after GST. 

People and Pharmaceutical Companies are concerned whether manufacturing Cost of Pharmaceutical Products will Decrease or Increase or Will remain Same?

Well the good news is….

Prices of Pharma Products after GST will Decrease

pcd pharma products prices after gst

Why would the prices of pharma products DECREASE after GST ?

I know that many of you will not read this post after reading the above paragraph, you will be directly calling your pcd pharma company to send the revised price list.

But let us take a deep look on the factors determining the manufacturing cost of pharma products to know why this decrease in rate of pharma products and how much.

Factors Affecting Manufacturing Cost Before GST


Excise Duty


CST (Central Service Tax)


VAT (Value Added Tax)


This was the major factor affecting the manufacturing cost of medicines. Excise Duty on manufacturing was 12.5% and the main problem was that it was non-refundable. So all the cost of excise duty paid to government gets added to the price of the products.

pcd pharma products prices after gst

CST (Central Sales Tax)

After the excise duty, CST has to paid to the government while purchasing goods from out of state manufacturing facility. CST was 2% on the invoice value.

CST was also non-refundable. So this adds extra 2% to the cost of products.

pcd pharma products prices after gst

VAT (Value Added Tax)

VAT or Value Added Tax on selling products to the same state was 5% but the good thing about that was it was refundable if you sell those products in same state but that was not the case with many pharmaceutical companies.

Many companies situated in Gujarat or Himachal Pradesh buys goods from same state and sell those to all over India which results in paying govt. 5% VAT while purchasing goods and this is non-refundable due to these companies selling their products out of state.

pcd pharma products prices after gst

Cost of Raw Material

Manufacturers of Pharmaceutical Products used to buy raw material after paying excise duty on them as well which leads to increase in the price of raw material which further leads to increase in the manufacturing cost.

pcd pharma products prices after gst

Factors Affecting Manufacturing Cost AFTER GST





GST on RAW Material Purchase

Now when the manufacturers will purchase raw material from anywhere in India they will be charged 18% GST but don’t you worry after seeing this 18% figure as most of it will get reimbursed when they will sell the finished goods.

pcd pharma products prices after gst

GST on Finished Goods

Now when manufacturers will sell the finished goods to pharma companies all over India, they will be charging 12% GST (assuming net value of collected value of GST is less than paid value) which they can keep it to themselves as they have already paid 18% on the raw material.

So on the whole they are now neutralising almost all amount of tax, which will lead to decrease in the manufacturing and supply cost of medicines.

pcd pharma products prices after gst

How much the cost of Pharma Products DECREASE after GST?

You might be wondering how much cost will decrease of pharma products after GST. Well we are not sure of the exact amount of decrease but decrease will be in the range of 5 - 10 % of the previous manufacturing cost.

% Decrease in Prices After GST

Manufacturing Cost Decrease 10%


This is the first thing you will want after reading this post. So I recommend you if you have taken the Pharma Franchise of any company that you should go and ask for the revised prices before placing any order.

If you want to get the revised price list of our company (Trumac Healthcare) then you can always  send us query by clicking on button on the bottom right of your screen)

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