The Retail Distribution Chemists Alliance (RDCA) in Delhi, with the introduction of GST 2.0 scheduled for September 22, 2025, has raised concerns for the financial burden the transition will place on pharmaceutical distributors and retailers.
RDCA president Sandeep Nangia has requested urgent support from pharmaceutical partners to ensure a smooth transition and uninterrupted medicine supply.
The GST reformed rates on pharma products from 12 per cent or 18 per cent to 5 per cent or even zero per cent, are to provide an advantage to the patients. As per Nangia, the execution method is creating overlapping credit cycles that put pressure on cash flow. Before and after the GST rate reduction, the purchases are dropping in the same payment due window, effectively doubling the outflow for small traders.
“For example, a distributor buying stock worth Rs. 10 lakh on September 23 must pay by October 30. If they also purchase on October 21, that payment is also due by October 30. So instead of easing pressure, it creates an unsustainable financial spike,” Nangia expressed.
As per him, these compressions in the credit cycle are counterproductive and weaken the objective of the government for the GST revision.
RDCA for resolving the same has proposed practical solutions to its industry partners. First, it has requested a genuine thirty-day extended credit period with staggered payment cycles to facilitate financial pressure. Second, it suggests a one-time 5% cash discount on the closing stock as of September 21 to help reduce the losses due to the GST revision.
Third, across ongoing products, the RDCA recommends rolling out the special trade discounts to balance the impact on retailers. The association claims that these measures shall support the trade sector in staying financially stable across this transitional period.
Since the small chemists are pushed to sell the medicines purchased at a higher GST under the new, lower MRP, they are at risk because these losses cannot be avoided.
“The tax differential of up to 7 per cent is impossible for most small traders to absorb without relief. This could affect medicine availability and lead to unintended supply disruptions,” he cautioned.
For managing the returns, RDCA has cited concerns. Even if the retailer originally paid 12 per cent or 18 per cent, the returned product after September 22 will be credited at a new 5% GST rate. It results in losses that cannot be recovered for dealers who shall make their operations strained.
GST 2.0 is to provide an advantage to the consumers, and the RDCA supports it. Nangia added that “We urge manufacturers and distributors to treat this as an urgent matter and offer practical, time-bound solutions to support the trade network.”
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Towards the patient’s welfare, RDCA has taken a pledge while insisting that the long-term trust in the supply chain depends on equitable management of this transition.
