GST on medicines in India depends on the type of drug. Life-saving and critical drugs attract 0% GST (Nil). Most other medicines attract 5% GST. Select non-essential medical goods attract 18% GST.
These rates were announced at the 56th GST Council meeting and took effect on 22 September 2025. Most medicines moved from the earlier 12% slab to 5%. Also, 36 specified life-saving drugs that were previously taxed are now fully exempt.
The change aims to make essential medicines more affordable. It also keeps a moderate rate on general pharmaceuticals so manufacturers can claim Input Tax Credit (ITC) on raw materials.
Key Takeaways
- GST on medicine in India is 0% for 36 specified life-saving drugs, 5% for most other medicines, and 18% for select non-essential medical goods.
- The government cut the rate on most medicines from 12% to 5% on 22 September 2025. It replaced the old four-slab system with a simpler three-tier structure.
- 33 previously-taxed lifesaving drugs moved from 12% to Nil, and 3 additional critical cancer/rare-disease drugs moved from 5% to Nil, for 36 total drugs at Nil GST.
- CBIC Notification No. 10/2025-Central Tax (Rate), dated 17 September 2025, sets out the exemption list and supersedes the earlier 2017 notification.
- Medicines fall under HSN Chapter 30, with 3003 and 3004 covering most formulated drugs.
- Exemption applies strictly to notified items, a similar-sounding drug not specifically listed stays taxable at 5%.
What is GST on Medicines in India?
The table below shows the current GST rates on medicine after the September 2025 reform:
| Category of Medicine | GST Rate |
|---|---|
| Life-saving and critical drugs (36 specified items) | 0% (Nil) |
| Most medicines, general drugs, and formulations | 5% |
| Nutraceuticals, vitamins, and health supplements | 5% |
| Non-essential medical goods and devices | 18% |
Note: Medicines do not attract compensation cess under the current structure, so the stated rates represent the total tax at the point of sale.
New GST Rates on Medicine After the September 2025 Reform
The September 2025 reform, part of GST 2.0, replaced the old four-slab medicine structure with a simpler three-tier system:
| Medicine Category | Old Rate | New GST Rate |
|---|---|---|
| 33 specified lifesaving drugs | 12% | 0% (Nil) |
| 3 critical cancer/rare-disease drugs | 5% | 0% (Nil) |
| General medicines and formulations | 12% | 5% |
| Nutraceuticals and health supplements | 18% | 5% |
| Non-essential medical devices/goods | 18% or 12% | 18% (unchanged for some categories) |
Note: The exemption isn’t a blanket rule for “essential” medicines generally, only items specifically named in Annexure I of Notification No. 10/2025 qualify for Nil GST. A drug treating a similar condition but not on the list is still taxed at 5%.
GST-Exempt Medicine List in India
The government exempts certain medicines from GST to keep essential healthcare affordable. CBIC Notification No. 10/2025-Central Tax (Rate), effective 22 September 2025, lists the fully exempt drugs in Annexure I.
The exempted list includes:
- Anti-cancer drugs: Rituximab, Pembrolizumab, Trastuzumab.
- HIV/AIDS treatment: Antiretroviral (ARV) medications.
- Tuberculosis drugs: Bedaquiline, Delamanid.
- Malaria and Kala Azar drugs: Artemisinin-based combination therapies.
- Insulin for diabetes treatment.
- Rare-disease therapies: Gene therapies, monoclonal antibodies, and enzyme replacement therapies, including Onasemnogene Abeparvovec, Daratumumab, and Risdiplam.
- Immunization drugs: Polio, Measles and Rubella, and DTP vaccines.
- Government health program supplies: Drugs supplied to AIIMS and government hospitals, medicines under PMBJP (Janaushadhi), and drugs procured for public health initiatives.
- AYUSH medicines: Select Ayurvedic formulations, homeopathic essential drugs, and Siddha/Unani medicines under government programs.
- Other exemptions: Blood and blood products, oral rehydration salts, contraceptives, specified diagnostic kits and reagents, and certain medical implants like cochlear implants (varies by notification).
HSN Codes for Pharmaceutical Products
Pharmaceutical products fall under Chapter 30 of the HSN code system. Common codes include:
| HSN Code | Covers | GST Rate |
|---|---|---|
| 3002 | Human blood, vaccines, antisera, and similar biological products | Nil or 5%, item-specific |
| 3003 | Medicaments with multiple constituents for therapeutic use (not retail form) | 5% (bulk drugs) |
| 3004 | Formulated medicines for therapeutic/prophylactic use (retail form) | 5%, or Nil if specifically notified |
| 3006 | Pharmaceutical goods, surgical catgut, blood-grouping reagents | 5% or 18%, item-specific |
Correct HSN classification is essential for compliance. Verify the exact code and current rate through the GST portal or a professional consultant before invoicing, rather than relying on older reference lists.
GST Calculation on Medicine with an Example
GST is calculated on the taxable value, the price of the medicine before tax.
For example:
A medicine priced at ₹1,000, falling under the 5% GST slab:
- GST amount: ₹1,000 × 5% = ₹50
- Total price after GST: ₹1,000 + ₹50 = ₹1,050
For intra-state sales, the 5% splits into 2.5% CGST and 2.5% SGST. For inter-state sales, it’s 5% IGST. The total tax remains ₹50 either way.
Can You Claim Input Tax Credit on Medicine?
GST-registered pharmaceutical businesses can claim ITC on eligible purchases used for business operations, subject to standard conditions:
- Raw materials and formulation inputs: ITC is available when GST-paid inputs are used to manufacture taxable medicines.
- Nil-rated (exempt) medicines: ITC is generally not available on inputs used solely to produce fully exempt drugs, since ITC follows the taxability of the output.
- Mixed manufacturing: Businesses producing both exempt and taxable medicines must apportion ITC accordingly.
Note: The government kept most medicines at 5% because a full exemption would block ITC on raw materials and could raise industry costs.
GST Compliance for Pharma Businesses
Pharmaceutical companies must follow GST compliance regulations, including:
- GST registration is mandatory for businesses exceeding the prescribed turnover limit.
- Businesses must file regular GST returns (GSTR-1, GSTR-3B) and comply with e-invoicing norms.
- Companies must maintain records of tax invoices, ITC claims, and HSN code classifications, and update pricing to reflect the September 2025 rate changes.
