Drug licence validity and the retention fee

Last reviewed: 7 October 2026 · Pharma Mithra

Does a drug sale licence expire?

Not in the old sense. Since an amendment to the Drugs Rules, 1945 that came into force on 27 October 2017, a sale licence in Form 20, 20A, 20B, 20BB, 20F, 20G, 21, 21A, 21B or 21BB remains valid as long as the licensee pays a licence retention fee before the end of every five-year period from the date of issue, unless the licensing authority suspends or cancels it. The licence forms themselves now say that the licence, unless sooner suspended or cancelled, remains valid perpetually.

In return, the licensing authority assesses whether you comply with the licence conditions, the Act and the Rules at least once every three years, or more often where it judges the risk calls for it. "Perpetual" means no renewal application; it does not mean no inspection.

The retention fee: how much and when

How much

The retention fee is equal to the fee required for the grant of that licence. Confirm the current amount, and how it is worked out where you hold several licence forms at the same premises, with your licensing office or its online portal rather than relying on a figure from a friend or an old receipt.

When

The fee must be paid before the end of each five-year period counted from the date the licence was issued. For example, a licence issued on 10 March 2022 must have its retention fee paid before 10 March 2027, and again before 10 March 2032. Take the date of issue from the licence itself, not from the date you started trading or the date of an inspection.

Paying late: the six-month window

If the retention fee is not paid by the due date, the Rules allow it to be paid with a late fee of two per cent of the licence fee for every month or part of a month, for up to six months. A part month counts as a full month, so paying 40 days late means two months' late fee: the retention fee plus four per cent of the licence fee.

If the fee is still not paid by the end of those six months, the licence is deemed to have been cancelled. There is nothing left to pay at that point; the firm needs a fresh licence. Our guide to expired, suspended or cancelled licences explains what that status means for the people who buy from you.

What "valid up to" means on an older certificate

Before the 2017 amendment, sale licences were granted for a fixed period and had to be renewed, so certificates issued then usually carry a "valid up to" or "valid till" date. Depending on the state and the licence, that date may be the old renewal date or the date the next retention fee falls due. Either way, a past date on an old certificate is a question to be answered, not proof on its own that the licence has ended.

Because buyers and inspectors will still read that date, keep proof of every retention fee payment with the licence: the receipt or challan, and any endorsement or fresh certificate your state issues. If you are unsure which date applies to your licence, ask your licensing office.

Changes you must report

Pharmacist or competent person

The licence conditions require you to report any change in the qualified person or competent person in charge to the licensing authority within one month of the change.

Constitution of the firm

If a partner joins or leaves, the proprietor changes, or the business is converted into a company, inform the licensing authority in writing. The current licence remains valid for at most three months from the date of the change, unless a fresh licence is taken in the meantime in the name of the firm with its new constitution. Start the application before the change, not after.

Premises

A sale licence covers the premises named in it, and the Rules require a separate licence for each place where drugs are sold or stocked for sale. Moving the shop, or adding a godown or a second counter elsewhere, means going to the licensing authority first. The procedure for a change of address differs between states.

Additional drug categories

A Form 21B licence lists the categories of Schedule C(1) drugs it covers. To deal in further categories, apply to the licensing authority for permission, which is endorsed on the licence.

A lost or damaged licence

If the original licence is defaced, damaged or lost, the licensing authority can issue a duplicate copy for a fee. Apply promptly, because the licence must be on display.

A checklist for keeping your licence in force

1. Write the date of issue of each licence on your calendar and set a reminder well before each five-year due date.
2. Pay the retention fee before the due date and file the receipt with the licence.
3. Keep the licence displayed in a prominent place in the part of the premises open to the public.
4. Keep the registers and records the Rules require, and keep the Inspection Book (Form 35) in which inspectors record their observations.
5. Report a change of pharmacist or competent person within one month, and a change of constitution before it happens.
6. Keep documents on ownership or rental of the premises and on the constitution of the firm ready: the licensing authority can ask for them at any time while the licence is in force.
7. Reply to any show-cause notice in time. A licence can be suspended or cancelled only after you have been given an opportunity to show cause.

Your buyers will be checking your licence the same way you check your suppliers'. For what they look at, see how to verify a drug licence.

This guide is general information about Indian drug and tax law for businesses, not legal advice. Rules and procedures can differ by state; your state drug control department or GST office has the final word on any individual case.