The rule most chemist shops still get wrong: a retail drug licence has not expired since 2017. Under Rule 63 of the Drugs Rules 1945, Forms 20 and 21 stay valid perpetually as long as you deposit a retention fee before the end of every five years. Miss that payment long enough and the licence is deemed cancelled.
Which licences and registrations have to stay valid every single day?
As of 2026, a retail drug licence does not need renewal, it needs a retention fee equal to the grant fee before the end of each successive five-year block (Rule 63, as substituted by G.S.R. 1337(E) dated 27 October 2017). Pay late and you owe 2% of the licence fee per month for up to six months. After that window, the licence is deemed cancelled, and you are trading without one.
The statutory fee itself is small. Rule 59(2) puts ₹1,500 with the Form 19 application for a retail sale licence as of 2026, ₹500 for a Form 19A restricted licence and ₹500 for Form 19C where Schedule X drugs are involved. The same amount falls due again as the retention fee under Rule 63(2). Your all-in state figure will be higher, because state portals add their own inspection and processing charges, so confirm the number on your state's fee schedule before you budget.
The application goes to the licensing authority appointed by your State Government under Rule 59(1), that is the state drugs control administration or state FDA, not CDSCO. Whether you file on paper or through a state online portal depends on the state. The Drugs Rules also prescribe no time limit for granting a retail sale licence, so any "licence in 90 days" promise you have read is a state service commitment at best, not a central rule.
Form 20 now carries its own inspection note: compliance is assessed at least once every three years on a risk-based approach. GST registration, shop and establishment registration and Udyam are separate tracks with their own thresholds and authorities, and none of them substitutes for the drug licence. Selling drugs without a valid licence is not a paperwork lapse. Section 27(b)(ii) of the Drugs and Cosmetics Act 1940 carries three to five years' imprisonment and a fine of not less than ₹1 lakh or three times the value of the drugs confiscated, whichever is more.
What do the rules actually say about a registered pharmacist at the counter?
Rule 65(2) requires every prescription sale to be made by, or under the personal supervision of, a registered pharmacist whose State Pharmacy Council registration is current. The inspectable fact is the registration, not the framed degree on the wall.
D.Pharm (two years), B.Pharm and Pharm.D are the qualifications recognised for registration as a pharmacist under the Pharmacy Act 1948. M.Pharm is a postgraduate qualification, not a separate route to the counter. Rule 64(2)'s alternative of matriculation plus four years of drug-selling experience belongs to the wholesale competent-person route, and a lot of Hindi and English articles still misapply it to retail pharmacies. Do not build a shop plan on it.
If you do not hold a pharmacy qualification yourself, the legal path is to employ a full-time registered pharmacist and keep the appointment letter or affidavit with the registration certificate. What you cannot do is show one pharmacist at two shops, or run on a certificate rented from someone who never visits. That has always been illegal, and since 13 December 2023 the Pharmacy Council of India has required Aadhaar authentication of pharmacist registration, which makes duplication far easier to spot. Rule 66 lets the licensing authority suspend or cancel the licence after a show-cause notice, and Section 27(d) carries one to two years' imprisonment with a fine of not less than ₹20,000.
Which medicines can you sell without a prescription?
India has no statutory over-the-counter category, so the real line is scheduled versus non-scheduled. Under Rule 65(9), anything in Schedule H, Schedule H1 or Schedule X may be sold by retail only against a registered medical practitioner's prescription. Everything else can be sold without a prescription, but still under a registered pharmacist's supervision. The phrase "OTC" has no definition in Indian drug law.
Schedule H1 now runs to 50 molecules, with Oxytocin at 47, Tapentadol at 48 and the antivirals Oseltamivir and Zanamivir added at 49 and 50. Those last two matter every flu season, when walk-in demand spikes and nobody is carrying a prescription. Rule 65(3)(h) requires a separate H1 register recording the prescriber's name and address, the patient's name, the drug and the quantity supplied. Keep it for three years and keep it where it can be produced on inspection, not in a drawer at home.
Schedule X sits one level higher: it needs its own licence forms (20F and 21G), and the prescriptions and signed orders behind those sales must be retained for two years. Copies of your ordinary cash or credit sale memos are kept for three years, and every other register for at least two years from the last entry. Write the entry at the time of sale, because reconstructing an H1 register the night before an inspection is exactly what a mismatch in handwriting and ink reveals.
One counter habit is worth more than any register: if you cannot read a prescription with certainty, do not guess the molecule or the strength. Send the customer back to the prescriber, or call the clinic and note who confirmed it.
How should medicines be stored, and does a medical store need an AC?
No central rule tells a medical store to install an air conditioner. Rule 64(1) requires premises that are adequate and equipped with proper storage accommodation for preserving the properties of the drugs, and the legal test is the storage condition printed on the label. If the label says below 25 degrees and your shop sits at 34 in May, that is the violation, whether or not you own an AC.
A refrigerator is needed where you actually stock cold-chain lines: vaccines, insulin, some eye drops. Keep a written temperature log for it, keep it away from the door, and plan for the daily power cut, because a fridge that lost its range overnight cannot be un-lost. Monsoon humidity does its own damage to cartons and strips, so keep stock off the floor.
Schedule N sets the rest of the premises minimums, and inspectors read it literally: a dispensing area of at least 6 square metres for one pharmacist plus 2 square metres for each additional pharmacist, ceiling height of at least 2.5 metres, a washable floor, and a cupboard under lock and key marked POISON. Damaged and expired stock never shares a shelf with saleable stock, which brings us to the single most common finding of all.
What is the right way to handle expiry and near-expiry stock?
Rule 65(17) says no drug may be sold or stocked after its date of expiry. Read that twice: stocking is enough. An expired strip sitting on a saleable shelf is the violation, and nobody has to prove a sale happened.
The rule does leave one lawful place for expired medicine. Stock awaiting return, reimbursement or disposal by the manufacturer may be held only if it is stored separately from trade stock, in cartons whose top prominently displays the words "Not for sale". A marked carton on a separate rack, checked monthly, is the whole compliance answer.
Run the near-expiry sweep on a fixed date each month rather than when you happen to notice. Return windows and credit-note terms differ from one distributor to the next, so get yours in writing and file the return challan and credit note alongside the original purchase bill. Rule 65(3) already requires your purchase records to carry the date, the supplier's name, address and licence number, the drug name, quantity, batch and manufacturer, with bills serially numbered and kept in chronological order. Maintain that properly and a recall becomes a ten-minute search by batch number instead of a shelf-by-shelf panic.
There is a newer check at the intake stage too. Rule 96(6) and (7) with Schedule H2 require manufacturers of 300 named brand packs to print or affix a bar code or QR code carrying a unique product identification code, generic and brand name, manufacturer, batch number, manufacturing and expiry dates and manufacturing licence number. Scan a pack from the consignment before you sign for it.
Where do medical stores get caught on price, billing and GST?
DPCO 2013 para 26 is blunt: no person shall sell a formulation to a consumer above the price in the current price list or the price on the label, whichever is less. Para 27 adds that loose or split quantities cannot exceed the pro-rata price, so cutting a strip into four does not create a rounding opportunity. Para 25(3) requires every retailer to display the manufacturer's price list and supplementary price list where customers can consult it, and that display is checked.
Two changes since 2021 have moved money on the counter. GST on all drugs and medicines fell from 12% to 5% on 22 September 2025, decided at the 56th GST Council meeting on 3 September 2025, with 33 lifesaving drugs moving from 12% to nil and three more from 5% to nil, and several medical devices and diagnostic kits dropping to 5%. If your billing software still carries 12% on a medicine line, every bill you print is wrong.
The second change is sharper. The Drugs (Prices Control) Amendment Order 2026, notified on 30 June 2026, inserts a proviso to para 24(1): where a manufacturer shows it circulated the revised price list to dealers within two weeks, advertised the reduction in two national newspapers and published it on its website, the overcharged amount is computed solely on the stock handled by the retailer, distributor or stockist found selling that batch above the ceiling price. Sitting on old-MRP stock after a price cut is now your exposure, not only the manufacturer's. NPPA publishes ceiling and revised retail prices continuously, with notifications dated 27 August and 1 September 2026, and its Pharma Sahi Daam service is the official way to check a ceiling price while the customer is still standing there.
On billing itself, the cash or credit memo is not optional paperwork, it is the record you must produce for three years. A no-bill cash sale leaves you with nothing to show an inspector, nothing to reconcile against your purchase register and nothing to support a return. If you are still setting up your invoice format, the GST invoice rules guide (Hindi) covers the fields.
Which mistakes can get a drug licence suspended or cancelled?
Rule 66 allows suspension or cancellation of the licence after a show-cause notice, and the findings below are the ones that trigger it.
| What goes wrong | What an inspector sees | What it can cost (2026) |
|---|---|---|
| Selling from premises not covered by the licence | Sale from an address the licence does not endorse | Sec 27(b)(ii): 3 to 5 years and fine of at least ₹1 lakh or 3x the value of drugs confiscated |
| Prescription sale with no pharmacist present | Attendance record, appointment letter, expired or unauthenticated council registration | Rule 66 suspension or cancellation; Sec 27(d): 1 to 2 years and fine of at least ₹20,000 |
| Schedule H1 register missing or with gaps | Register called for, entries do not match H1 sales | Sec 27(d): 1 to 2 years and fine of at least ₹20,000 |
| Expired stock on the saleable shelf | Past-expiry strips mixed with trade stock | Breach of Rule 65(17), same Sec 27(d) exposure |
| Stock bought from an unlicensed source | Purchase bills without the supplier's licence number, not serially numbered | Breach of Form 20 condition 4 and Rule 65(3) |
| Charging above the ceiling or label price | Sale memo checked against the current price list | Overcharged amount recoverable from the shop under the DPCO Amendment Order 2026 |
| Spurious or adulterated drug causing death or grievous hurt | Sample fails; source traced to your purchase record | Sec 27(a): minimum 10 years up to life, fine of at least ₹10 lakh |
Form 20 condition 4 is the one owners underrate: no drug shall be sold unless it was purchased under a cash or credit memo from a duly licensed dealer or manufacturer. A B2B online distributor is perfectly fine, as long as the seller holds a valid wholesale licence and the memo carries that licence number.
When a notice arrives, do not treat it as a conversation to be settled verbally at the counter. Reply in writing within the time given, attach the registers and purchase bills that answer the specific finding, and keep a copy of what you filed. A show-cause answered with documents is a very different file from a show-cause ignored.
How do you keep stock, udhaar and cash flow under control?
The only officially fixed retail margin in India is the 16% margin to retailer that DPCO 2013 builds into the ceiling price of scheduled formulations under NLEM 2022. Non-scheduled formulations are monitored rather than fixed, with MRP increases capped at 10% in any twelve months. So the shop's profit is a working-capital game, not a markup game, and anyone selling you a "high profit business" story about a chemist shop is skipping that arithmetic.
That makes dead stock the expensive mistake. Money parked in slow movers is money you borrowed from your distributor's credit period, and it comes due whether the strip sells or not. Classify by movement every month, hold depth only on what actually turns, and let the near-expiry sweep double as a buying review: anything you return twice you were buying wrong.
Billing software with batch and expiry alerts pays for itself here, and it also has to serve compliance, since your registers must survive three years and be producible on demand. Pick one that exports. If you are weighing counter hardware alongside it, this explainer on POS machines and their types (Hindi) is a reasonable starting point.
Then there is the udhaar that every neighbourhood chemist carries, usually for chronic patients who collect monthly and settle when a pension or salary lands. Written on a paper slip, it disappears. To track customer credit, a free khata app like OkCredit keeps every entry backed up and sends automatic payment reminders, with an SMS to the customer on each entry so both sides see the same number.
How does a local chemist stay in business against Jan Aushadhi and online pharmacies?
As of 2026 there are still no notified e-pharmacy rules in the Drugs Rules, while Jan Aushadhi has roughly doubled since 2021: 20,149 Kendras were operational as of 30 June 2026, spread across 776 of 784 districts, against a target of 25,000 by March 2027.
Those Kendras carry 2,110 medicines and 315 surgical items, consumables and devices, sold 50% to 80% below branded alternatives. As of March 2026, a Kendra owner also receives an incentive of 10% of monthly purchases capped at ₹10,000 a month, plus up to ₹10,000 for stocking 200 high-demand medicines. Your customer knows the price gap exists. Pretending otherwise at the counter loses the relationship faster than the price does.
On e-pharmacy, the honest position is that the sector operates without dedicated rules. AIOCD called a nationwide 24-hour pharmacy shutdown on 20 May 2026 over e-pharmacy operations, pharmacy bodies in 12 states declined to join it, and CDSCO said the issues raised are under active review and that the regulatory framework governing the sector is being examined. Also in circulation is a draft Drugs, Medical Devices and Cosmetics Bill 2026, which would move manufacturing licensing from 36 state regulators to a central authority, replace criminal prosecution with financial penalties for minor procedural lapses, and for the first time expressly address online sale of drugs by prohibiting it except through prescribed methods. As of August 2026 it is a draft under stakeholder consultation, opposed by states on centralisation and by device makers who want a separate law. None of it is a duty on you yet.
What an app cannot do is the part worth investing in: same-hour delivery inside your locality, knowing which chronic patient is due for a refill on the 3rd of the month, being open at 11pm, and being the person the neighbourhood doctor trusts to explain a substitution correctly. Before adding a new line, whether it is Schedule X, devices or anything sitting under a separate schedule, confirm with your state licensing authority which form or endorsement it needs. On the demand side, the basics of local business marketing (Hindi) still apply to a chemist shop.
What do you need in place before opening a new medical store?
Premises first. A retail-only licence in Form 20/21 needs at least 10 square metres, and 15 square metres if the same premises will also hold a wholesale licence in Form 20B/21B, with the Schedule N dispensing area, ceiling height and POISON cupboard inside that. Then Form 19 with the ₹1,500 fee as of 2026, a registered pharmacist with current State Pharmacy Council registration plus an appointment letter or affidavit, proof of ownership, tenancy or occupation with a site plan (Rule 65A lets the authority demand the plan at any time), the firm's constitution and ID documents, and a declaration of your storage and refrigeration arrangements. States commonly add checklist items of their own.
There is no credible all-India figure for what opening costs, and the third-party numbers floating around vary too widely to average. The variables are rent, the pharmacist's salary and opening stock, and much of that stock is funded on distributor credit rather than cash. For the full step-by-step, read the dedicated medical store opening guide (Hindi).
Frequently asked questions
Is a registered pharmacist compulsory at a medical store?
Yes. Rule 65(2) of the Drugs Rules 1945 requires every prescription sale to be made by or under the personal supervision of a registered pharmacist whose State Pharmacy Council registration is current. Since 13 December 2023, PCI requires Aadhaar authentication of that registration, so one pharmacist cannot be shown at two shops.
Does a drug licence need renewal every five years?
No, not since 2017. Rule 63 ended five-yearly renewal of sale licences. Forms 20, 21 and the related forms are now valid perpetually, provided a licence retention fee equal to the grant fee is deposited before the end of every succeeding five years. Late payment costs 2% of the licence fee per month for up to six months, after which the licence is deemed cancelled.
Can a medical store charge more than the printed MRP?
No. DPCO 2013 para 26 prohibits selling a formulation to a consumer above the price in the current price list or the price on the label, whichever is less, and para 27 caps loose quantities at the pro-rata price. Ceiling prices can be checked on NPPA's Pharma Sahi Daam service.
How long must the Schedule H1 register be preserved?
Three years. Rule 65(3)(h) requires the separate H1 register to record the prescriber's name and address, the patient's name, the drug and the quantity, and it must be open to inspection. Schedule H1 now covers 50 molecules, including Oseltamivir and Zanamivir.
What is the GST rate on medicines in 2026?
5%. GST on all drugs and medicines was cut from 12% to 5% with effect from 22 September 2025, following the 56th GST Council meeting on 3 September 2025. Thirty-three lifesaving drugs moved to nil, and several medical devices and diagnostic kits came down to 5%.
Rules and fees change. Verify licence fees, forms and current ceiling prices with your state drugs control authority, CDSCO and NPPA before you act on them.
