Pharma units are eligible for general small-scale industries excise duty exemption scheme. As such, units having clearance value upto Rs 4 crore in the preceding financial year are eligible for full excise duty exemption on their first clearances upto Rs 1.5 crore in a financial year, subject to certain conditions.

In the States of Uttarakhand & Himachal Pradesh, new units or units undertaking substantial expansion are fully exempt from excise duty, while such units in the North East, Jammu & Kashmir and Kutch are entitled for refund of duty paid in cash.

In the budget 2008-09, the issue of excise duty on pharma products was examined and excise duty on pharmaceutical products including drugs has been reduced from 16% to 8%. The tax-exemption under small-scale exemption scheme was also examined and it was decided not to make any change for the present.