GST Council allows pharma firms input tax credit on free samples and expired stock from FY28

The GST Council has approved changes to GST law and rules that will benefit pharmaceutical companies beginning the next financial year. Under the new provisions, pharma firms will be permitted to claim input tax credit (ITC) on free samples distributed to medical professionals and patients. Additionally, companies will be allowed to claim ITC on goods that are destroyed after expiry, addressing a long-standing industry concern.

These modifications are set to become effective from the start of fiscal year 2028. The decision aims to streamline tax treatment for the pharmaceutical sector and reduce the tax burden on companies managing product samples and expired inventory.

The changes reflect the GST Council's effort to balance tax compliance with industry operational realities, particularly for sectors like pharmaceuticals where sample distribution and product expiry are routine business activities.