After GST 2.0 (effective 22 September 2025) the 12% pharma slab was abolished. Most medicines and formulations are now taxed at 5%, down from 12%. 36 notified life-saving drugs (cancer, rare-disease and chronic-condition medicines) are now Nil-rated. Hospital in-patient treatment stays exempt, and bulk Active Pharmaceutical Ingredients (APIs) remain at 18%.
Pharmaceutical GST Rate Chart — 2025-26
The current GST rate for every common pharmaceutical, medical-device and healthcare scenario, with the HSN heading. Rates reflect the GST 2.0 two-slab structure effective 22 September 2025.
| Product / Supply | GST Rate | HSN | Notes |
|---|---|---|---|
| Most medicines & formulations (tablets, syrups, injections) | 5% | 3003 / 3004 | Was 12% before 22 Sep 2025 |
| 33 notified life-saving drugs | Nil | Ch. 30 | Cut from 12% to Nil |
| 3 cancer / rare-disease drugs | Nil | Ch. 30 | Cut from 5% to Nil |
| Insulin, vaccines, ORS | 5% | 3002 / 3004 | Life-saving formulations |
| Ayurvedic / Unani / Homeopathy medicines | 5% | 3003 / 3004 | Same as allopathic now |
| Medical devices (glucometers, thermometers, diagnostic kits) | 5% | 9018 / 9027 | Was 12% / 18% |
| Wheelchairs, hearing aids, artificial limbs | 5% | 9021 | Assistive devices |
| Nutraceuticals / protein powders / multivitamins | 5% | 2106 | Cut from 18% to 5% |
| Sanitary napkins | Nil | 9619 | Exempt since Jul 2018 |
| Human blood & components, contraceptives | Nil | 3002 | Exempt |
| Bulk Active Pharmaceutical Ingredients (API) | 18% | 2941 etc. | Industrial input |
| Hospital in-patient treatment (incl. medicines given) | Exempt | SAC 9993 | Composite healthcare supply |
Rates are indicative — the exact rate follows the specific HSN code. Confirm on the official GST portal before invoicing.
Medicines Before vs After 22 Sep 2025
The biggest change for pharma under GST 2.0 was the removal of the 12% slab. Almost every finished medicine that was 12% is now 5%, and a list of critical drugs went to Nil.
Before — old regime (to 21 Sep 2025)
- Most medicines taxed at 12%
- A few life-saving drugs at 5%
- Medical devices at 12% or 18%
- Nutraceuticals at 18%
- Higher embedded input cost
Now — GST 2.0 (from 22 Sep 2025)
- Most medicines cut to 5%
- 36 life-saving drugs now Nil
- Medical devices cut to 5%
- Nutraceuticals cut to 5%
- Lower MRP, but watch inverted duty
The rate cut is good news for patients, but it can worsen the inverted duty structure for traders — if you still buy old stock at 12% and sell at 5%, the accumulated ITC is claimable as a refund. Reconcile transitional stock carefully.
Unsure which rate now applies to your product line?
Get My GST Rate →GST on Hospital-Dispensed Medicines
When a patient is admitted and treated, the whole healthcare service — including medicines, implants and consumables used during treatment — is a single composite supply of healthcare, which is exempt from GST. An outpatient buying from the hospital pharmacy pays the normal 5%.
- In-patient treatment, surgery packages, ambulance, blood-bank and diagnostic services are exempt.
- A hospital pharmacy selling to outpatients / OTC charges the normal 5% — it is a taxable retail supply.
- Because healthcare is exempt, hospitals cannot claim ITC on their equipment, medicine and consumable purchases — a real cost.
A hospital providing exempt treatment cannot recover the GST it pays on medical equipment, medicines and consumables — that input GST becomes an embedded cost. Only the taxable OPD-pharmacy portion supports proportionate ITC.
Running a hospital pharmacy or nursing home? Get your exempt/taxable split right.
Talk to a GST Expert →GST on Medical Devices & Supplies
GST 2.0 brought almost all medical devices, diagnostic kits and disposables down to a uniform 5% — thermometers and BP monitors saw the sharpest cut (18% → 5%).
| Device / Supply | GST Rate | HSN |
|---|---|---|
| Glucometers, thermometers, BP monitors | 5% | 9018 / 9025 |
| Diagnostic & test kits | 5% | 3822 |
| MRI / CT / X-ray / ultrasound machines | 5% | 9018 / 9022 |
| Surgical instruments, gauze, bandages, gloves | 5% | 9018 / 3005 / 4015 |
| Wheelchairs, crutches, hearing aids, artificial limbs | 5% | 8713 / 9021 |
| Human blood & components | Nil | 3002 |
How GST Adds Up — ₹1,000 Medicine Bill
5% Retail medicine (now)
12% Same medicine (before GST 2.0)
On the same ₹1,000 of medicine, the tax fell from ₹120 to ₹50 — a ₹70 saving that manufacturers are expected to pass on via lower MRP. Use the GST calculator to work out any bill.
Selling medicines or devices? Get your rate mapping and invoices right.
Get Pharma GST Advice →ITC, Inverted Duty & Refunds for Pharma
Whether you can claim Input Tax Credit depends on whether your output is taxable or exempt.
| Business | ITC? | Notes |
|---|---|---|
| Standalone retail pharmacy (5% sales) | Yes | Full ITC on purchases, rent, software |
| Distributor / wholesaler | Yes | Normal B2B ITC; watch inverted duty |
| Manufacturer | Yes | ITC on APIs, machinery, packaging |
| Exporter of medicines (LUT) | Yes | Zero-rated — refund of accumulated ITC |
| Hospital pharmacy (attached to exempt hospital) | No | Blocked — same as exempt hospital |
Where inputs are taxed higher than the 5% output (e.g. old 12% stock, or 18% API against 5% finished medicine), the unused ITC accumulates. This is refundable under the inverted-duty-structure rule — file the refund rather than letting credit pile up.
Pharma GST Compliance Checklist
Registration is mandatory once aggregate turnover crosses ₹40 lakh for a goods supplier (₹20 lakh in special-category states). Here is the compliance picture for a pharmacy, distributor or manufacturer:
- GST registration (GSTIN)
- Correct HSN & rate mapping
- Tax invoice with HSN
- Transitional 12%→5% stock reconciliation
- Inverted-duty refund claim
- GSTR-1 (outward supplies)
- GSTR-3B (monthly/quarterly)
- ITC reconciliation with GSTR-2B
- E-invoicing applicability
- E-way bill for movement
- GSTR-9 annual return
- Exempt/taxable split (hospital pharmacy)
Frequently Asked Questions
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