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AMMOI urges Centre to exempt classical ayurvedic medicines from GST
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Peethaambaran Kunnathoor, Chennai
September 12 , 2025
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The Ayurveda Medicine Manufacturers Organisation of India (AMMOI) has appealed to Union finance minister Nirmala Sitharaman to revise the GST structure applicable to ayurvedic products.
In a letter signed by AMMOI President Dr. P. Ramkumar and general secretary Dr. D. Ramanathan, the organisation urged the government to exempt classical ayurvedic medicines from GST and reduce tax rates on proprietary formulations and ayurvedic cosmetics.
The letter was written following Prime Minister Narendra Modi’s Independence Day speech, in which he spoke about the government’s plan to rationalise the GST structure by moving from the current five-rate system (0%, 5%, 12%, 18%, 28%) to a simplified three-rate structure (0%, 5%, and 18%). While AMMOI welcomed the government's initiative to streamline the GST regime, it requested that ayurvedic products be treated as a special category and not be subjected to the standard slab structure, particularly the 18% rate, which it strongly opposes.
Currently, classical ayurvedic medicines are taxed at 5%, proprietary ayurvedic formulations at 12%, and ayurvedic cosmetics and personal care products at 18%. AMMOI has proposed a revised GST structure specific to Ayurveda, that classical medicines should be taxed at 0%, proprietary formulations at 5%, and ayurvedic cosmetics at 5%. The organisation stressed that Ayurveda is not just a treatment system but a centuries-old tradition rooted in Indian culture and public health.
Kerala, a state recognised globally for its preservation and promotion of Ayurveda, has played a major role in making India a centre for holistic healing. However, AMMOI expressed concern that the sector, especially small and medium manufacturers, is facing acute financial distress due to rising raw material costs, especially for ingredients like coconut oil, along with high GST rates. These challenges are putting pressure on the affordability of ayurvedic products for common people and threatening the sustainability of the sector.
The organisation also flagged the issue of inverted duty structure, where many raw materials attract higher GST rates than the finished products. This leads to blocked working capital and delays in refund processing, which particularly affect MSMEs. AMMOI requested the finance ministry to introduce a simpler and faster refund mechanism to help small manufacturers remain financially viable.
The ayurvedic drug manufacturers stated that GST reduction on ayurvedic products is not just a fiscal policy matter but a public health necessity. Lower tax rates would improve access to traditional medicines, support preventive healthcare, and reduce the burden on modern healthcare systems. Encouraging the use of ayurvedic products would also promote safer, natural alternatives to synthetic and chemical-based products.
The organisation believes that GST rationalisation in the Ayurveda sector will empower MSMEs, generate employment, promote wellness among citizens, protect traditional knowledge, and bolster India's position as a global leader in holistic and preventive healthcare.
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