How-to guides
How to Start a Medical Store: Drug Licence Basics, Setup and Stock Control
A medical store is one of the most regulated small shops in India. You cannot open one with capital alone: the law requires a registered pharmacist, premises of a minimum size, proper storage and a drug licence from the state. Once open, the business is about expiry dates, schedules and very precise stock. Here is the path from idea to first month.
Key takeaways
- Retail sale of drugs needs a licence from the state drugs control department, applied for on Form 19 and issued on Forms 20 and 21.
- A registered pharmacist must be in charge of a retail pharmacy, and the premises must be at least 10 square metres (15 with a wholesale licence too).
- Most medicines are at 5% GST since 22 September 2025; 36 life-saving drugs are nil-rated.
- Expiry, batch tracking and schedule H/H1/X records are daily work, not year-end work.
The drug licence in brief
Under the Drugs and Cosmetics Rules, 1945, a retail drug licence is granted by the state licensing authority (the drugs controller). The application is made on Form 19. The licences commonly issued to a retail pharmacy are Form 20, for drugs other than those in Schedules C, C(1) and X, and Form 21, for drugs in Schedules C and C(1). Wholesale licences are Forms 20-B and 21-B. Schedule X drugs need a further licence.
Most states now accept applications online through their drugs control or single-window portals. Fees, documents and inspection practice vary by state, so read your state's checklist before you sign a lease.
Licence and registration checklist
| Requirement | What it means | Where to check |
|---|---|---|
| Retail drug licence (Forms 20 and 21) | Applied for on Form 19, with fees set by the state | State drugs control department |
| Registered pharmacist | A pharmacist registered with the State Pharmacy Council in charge of the retail sale | State Pharmacy Council |
| Premises of the minimum size | At least 10 square metres for retail; 15 square metres for retail and wholesale together | Drugs and Cosmetics Rules, rule 64 |
| Proper storage | A refrigerator and storage suited to drugs that need it; the bill is often asked for | State checklist |
| GST registration | Compulsory above ₹40 lakh turnover of goods in most states | gst.gov.in |
| Shops and establishments registration and trade licence | As required by the state and the municipality | Labour department and municipality |
Checked on 11 November 2026 against the Drugs and Cosmetics Rules, 1945 (as summarised by state drugs control departments) and the CGST Act. Fees and documents vary by state.
Before you sign the lease
Inspectors check the premises against the licence conditions. Confirm the area, storage arrangement and ownership papers meet your state's checklist before committing to a shop.
Setting up the first month
- 1Agree terms with two or three distributors and get their GSTINs and drug licence numbers on record.
- 2Enter items with HSN, GST rate (most at 5%, some nil), pack size and MRP. Check the nil-rated list for life-saving drugs.
- 3Record every purchase with batch number, expiry and MRP from the supplier bill.
- 4Mark schedule H, H1 and X items so prescriptions are checked and registers are kept.
- 5Set a monthly routine to list items expiring in the next 90 days and return them to distributors where their policy allows.
- 6Print your drug licence numbers and GSTIN on every bill.
GST on a pharmacy bill
Since 22 September 2025 most medicines, Ayurvedic and homoeopathic medicines, thermometers, glucometers and diagnostic kits are at 5%, and 36 notified life-saving drugs are nil-rated. A strip with an MRP of ₹105 inclusive of 5% has a taxable value of ₹100 and GST of ₹5. Returns of medicines bought before the change are reversed at the old rate shown on the original bill.
Because nil-rated drugs are exempt supplies, credit on shared costs such as rent has to be split between taxable and nil-rated sales. Our page on GST on medicines works through it.
The numbers to watch
| Number | How to work it out | Why it matters |
|---|---|---|
| Near-expiry stock value | Cost of items expiring in the next 90 days | Unsold expired stock is a straight loss |
| Gross margin % | (Sales − cost of goods sold) ÷ sales × 100 | Watch it by category: generics, branded, FMCG |
| Stock days | Average stock ÷ cost of goods sold × 365 | Pharmacies carry many slow items |
| Credit to clinics and regular patients | Outstanding and its age | Easy to let grow quietly |
| Short-supply list | Items asked for but not in stock, weekly | Lost sales and lost customers |
Common mistakes
- Recording purchases without batch and expiry, so the expiry list is useless
- Selling the newest stock first and letting older batches expire
- Leaving the old 12% GST rate on medicine items
- Keeping schedule H1 sales without the register the rules require
- Running the shop without the registered pharmacist named on the licence
Where TripleBill fits
TripleBill's pharmacy mode, on the Pro plan, records batch, expiry (MM/YY) and MRP on purchase bills, sells the nearest-expiry batch first, blocks expired batches at the counter, searches by salt or composition, marks schedule H, H1 and X items with a prescription box, prints DL numbers on invoices and gives near-expiry, expired and schedule H register reports. GST reports and the GSTR-1 JSON are on Starter and above; you file on the GST portal.
It does not apply for your drug licence or replace the pharmacist's judgement at the counter.
Frequently asked questions
Can I open a medical store without being a pharmacist?
You can own one, but a registered pharmacist must be in charge of the retail sale of drugs, as the licence requires.
Which form do I use to apply for a drug licence?
Form 19 is the application for retail and wholesale licences; Forms 20 and 21 are the retail licences commonly issued. Check your state portal for the current process.
How much space does a medical store need?
At least 10 square metres for a retail licence, and 15 square metres if you hold retail and wholesale licences together.
What is the GST rate on medicines?
5% for most medicines since 22 September 2025, with 36 life-saving drugs nil-rated.
Do I need FSSAI registration too?
If you sell food products such as nutrition supplements or packaged food, yes, for those products.
How do I control expiry losses?
Record batch and expiry on every purchase, sell nearest-expiry first, and review items expiring in the next 90 days every month.
About the author
Written by the TripleBill team, the people who build the billing and accounting software this site is about. We check competitor prices on their own websites on the date shown above, and we say so when our product is the weaker choice. This article is general information, not tax advice.
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Related pages
Batches, expiry and schedules, handled at the counter.
Pharmacy mode on Pro tracks batches and expiry from the purchase bill to the sale.