The National Pharmaceutical Pricing Authority (NPPA) have issued guidelines regarding reduction in prices of non scheduled formulation packs consequent to reduction in excise duty from 16% to 8% and the rate of abatement from 42.5% to 35.5% notified by the Ministry of Finance, (Department of Revenue) on 01.03.2008. This is to ensure that the benefit of the excise duty reduction announced in the Union Budget for 2008-09 is passed on to the Consumers. 

A copy of the guideline issued by NPPA is reproduced below:-

“Consequent upon the reduction in the rate of excise duty on medicines from 16% to 8% notified by the Ministry of Finance, Department of Revenue vide Notification No.4/2008 Central (Excise) dated on 01.03.2008 and the rate of abatement from 42.5% to 35.5% vide Notification No.14/2008-Central Excise (N.T.) dated 01.03.2008, all manufacturers and marketing companies of formulation packs are advised to ensure that the benefit of this excise duty reduction and the reduced rate of abatement is passed on to consumers through reduced Maximum Retail Price (MRP). Prices of all non scheduled packs must accordingly be reduced downwards by 4.58% except in those categories of non scheduled formulation packs where no excise duty has been actually paid to the Government and therefore no excise duty shall be chargeable in the MRP of such non scheduled packs. The National Pharmaceutical Pricing Authority (NPPA) expects that the above reduction in MRP would be complied with by way of reduced MRP and that necessary revised price lists would be submitted to NPPA forthwith.

NPPA shall accordingly monitor the limit of 10% increase in prices per annum of non scheduled packs based on the reduced MRP for all such – packs where the batch of the formulation pack has been cleared by the manufacturer through the competent excise authorities on or after 1st March, 2008 in terms of above mentioned notifications of the Ministry of Finance (Department of Revenue) both dated 01.03.2008.”