There are a number of half-truths about ayurveda floating around. "Ayurvedic medicines do not have an expiration date" is one such half-truth.
The concept of expiration date for medicines used in modern medicine arises from the fact that after a certain time, the substances undergo a change which makes them either ineffective or toxic.
At the time when the major texts on ayurveda were written the practice was to consume the medication immediately after preparation. A majority of the medicines were in the form of decoctions, pastes, medicated oils and medicated ghees.
Over a period of time bhasma of metals and other inorganic substances began to be used mainly due to the fact that they were effective in small doses. This branch was called as Rasa-Shastra and preparation of mercury and sulphur was the base of this science. Besides the efficacy in small doses these medicines also became widely used as they could be stored for a longer time and hence there was never the question of what to do if a particular substance (plant) was not available.
A majority of medicines in Rasa-Shastra can be utilized a long time after their preparation and hence can be termed as not having an expiration date. However in plant based medicine the picture changes. As mentioned before it was never expected that a medicine would be prepared and used even the next day, so there was no question about thinking about expiration both in terms of loss of efficacy or toxicity.
But with change in time the need to prepare and store medicines need to be felt. Those who were uncomfortable with rasa-shastra medicines (there are many ayurvedic practitioners even today who never use rasa-shastra medicines, not out of fear of the brouhaha caused over metals in medicines but because they consider it to be inferior to plant based medicines) and used only plant based preparations had to resort to powder form and their variants like Mashi (coal preparations), Guti (small tablets), Vati (medium size tablets), Guggul (a medicinal substance which also acts as an adhesive) etc.
Since many of these are plant based it is unlikely that they will turn toxic after a certain period of time, but they will surely loose their efficacy.
So if a person has a doubt whether a one year old Choorna will work or not, he is loosely told "don't worry, there is no expiry date for ayurvedic medicine". While this may be true that it wont cause any harm, it is most certain that a one year old powder will not show the desired result.
There is an entire chapter in Sharangdhara Samhita where the efficacy period of various medicines is mentioned. This can be taken to mean expiration period for the same.
Having said that, there are only 3 types of ayurvedic medicines which do not have an expiration period. First is of course the Bhasmas as explained above. Second is medicated Ghees and third is Asava/Arishtha preparation (alcholic preparation). In fact it is said that the older the ghee or asava/arishtha the more efficient it is. This of course takes into account the fact that they are properly and hygienically stored. However many unscrupulous alter this information to say that all ayurvedic medicines fit the bill.
Rules about expiration of Ayurvedic Drugs:
1) Ayurvedic medicines do have an expiration period in the sense that the become ineffective after a certain amount of time. This period may be as short as 4 hours for freshly prepared decoction to around 2 years for properly prepared and stored tablet forms. Even medicated oils should not be used if they emit a stale odor.
2) Only Bhasmas, Ghees and Asava/arishta have no expiration period.
3) Ghees and Asava/arishta if prepared and stored properly increase in efficacy over a period of time.