New GST on Medicines in India: Tax Rates, HSN Codes & What You Need to Know
- Revised GST rates for medicines apply from 22 September 2025, with most finished formulations attracting 5% GST and specified life-saving drugs exempt or taxed at 0%.
- Essential healthcare products such as specified drugs and contraceptives may be exempt from GST under applicable provisions.
- Pharmaceutical businesses can claim eligible Input Tax Credit on business inputs, subject to GST conditions.
- Medicines must carry applicable HSN codes on GST invoices, such as HSN 3004 for medicaments and HSN 3002 for vaccines and blood products.
When it comes to health, access to affordable medicine is essential. While most life-saving drugs are either exempt or taxed at a lower GST rate, not all medicines are treated equally under the Goods and Services Tax (GST) regime. In this article, we break down the GST on medicines, explain the applicable HSN codes, and highlight how it affects consumers and pharmaceutical businesses.
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New GST Rate on Medicines in India: Category-Wise Breakdown
The revised GST rates applicable from 22 September 2025 are provided below for common medicine categories (no compensation cess applicable).
New GST Rates on Medicines
| Type of Medicine | New GST Rate (After 22 Sept 2025) |
Old GST Rate (Before 22 Sept 2025) |
|---|---|---|
| Life-saving drugs (e.g., HIV/AIDS, TB, cancer) | 0% / 5% | 0% / 5% |
| Most prescription medicines | 5% | 5% |
| Vitamins, supplements, and over-the-counter (OTC) products | 5% (where classified as applicable pharmaceutical products) | 18% |
Type of Medicine
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
Type of Medicine
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
Type of Medicine
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
HSN Code for Medicines
Medicines and pharmaceutical products fall under HSN Chapter 30 in the GST classification system. Businesses dealing in pharmaceutical products must use the correct HSN codes when issuing GST invoices or filing returns.
| Product Description | HSN Code | GST Rate |
|---|---|---|
| Medicaments (used in specific diseases) | 3004 | 5% |
| Vaccines for human medicine | 3002 | 5% |
| Blood and plasma | 3002 | 5% |
| Ayurvedic & homeopathic medicines | 3003 | 5% |
Product Description
HSN Code
GST Rate
Product Description
HSN Code
GST Rate
Product Description
HSN Code
GST Rate
Product Description
HSN Code
GST Rate
How to Calculate GST on Medicine
Let’s say you buy a strip of prescribed tablets for ₹100.
- GST @5% = ₹5
- Total Price = ₹105
For products taxed at 18% (such as applicable OTC products, supplements, or other classified items):
- GST @18% = ₹18
- Total Price = ₹118
If a life-saving drug is priced at ₹1,000 and falls under the applicable 5% GST category:
- GST @5% = ₹50
- Total Price = ₹1,050
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GST Exemptions on Medicines
Not all medicines are taxed. Some essential drugs and health products are exempt from GST, such as:
- Oral rehydration salts (ORS)
- Contraceptives
- Diagnostic kits for specific diseases
- Certain bulk drugs used in manufacturing life-saving formulations
These items fall under the 0% GST category, helping keep healthcare affordable.
GST on Ayurvedic and Herbal Medicines
GST on Ayurvedic, herbal, and homeopathic medicines depends on whether the product is classified as a medicinal formulation, health supplement, or another category under GST.
- Unbranded herbal products: GST depends on the product classification and applicable GST provisions.
- Branded or packaged Ayurvedic medicines: Generally taxed at 5% GST when classified as medicaments under HSN 3003 or 3004.
- Herbal supplements or wellness products: May attract 18% GST if they are classified as health supplements rather than medicines.
- Homeopathic medicines: Typically taxed at 5% GST when sold as medicinal formulations.
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Input Tax Credit (ITC) for Medical Businesses
Pharmaceutical companies, chemists, and hospital pharmacies can claim ITC on GST paid on:
- Raw materials and packaging
- Transportation and logistics
- Retail operations and utilities
ITC helps reduce the overall tax burden for GST-registered entities and improves profitability.
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GST on Medical Kits and Supplies
Several medical kits, diagnostic devices, and healthcare supplies are subject to GST. Under the revised GST structure effective from 22 September 2025, applicable medical supplies are taxed based on their specific classification.
| Item | New GST Rate (After 22 Sept 2025) |
Old GST Rate (Before 22 Sept 2025) |
|---|---|---|
| COVID test kits | 5% | 5% |
| Syringes and needles | 5% | 5% |
| Thermometers and BP monitors | 5% | 12% |
| Glucometers | 5% | 12% |
| Surgical instruments and dressings | 5% | 12% |
Item
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
Item
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
Item
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
Item
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
Item
New GST Rate
(After 22 Sept 2025)
Old GST Rate
(Before 22 Sept 2025)
These products are classified under applicable HSN codes based on the type of medical device or healthcare supply.
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- Salt/Composition tracking for each medicine item.
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- MRP-based sales and purchase billing with margin control.
- Sales schemes and discount tracking for pharma trade promotions.
- Detailed party-wise sales reports for distributors and chemists.
- Breakage and return management for damaged or expired stock.
Final Thoughts
GST (Goods and Services Tax) on medicines has helped streamline the pharmaceutical tax structure in India, replacing earlier VAT and excise duties. While many critical and life-saving medicines are taxed at lower rates or exempt under applicable provisions, most finished pharmaceutical products attract 5% GST based on their classification. For businesses, understanding applicable GST rates and Input Tax Credit provisions helps manage compliance and costs, while consumers can better understand the tax impact on their purchases.
