New GST on Medicines in India (2026): Tax Rates, Slabs, HSN Codes & Exemption Guide
A comprehensive, authoritative guide for medical store owners, pharmacists, pharmaceutical distributors, and consumers on Goods and Services Tax (GST) rates, HSN codes (3004, 3002), life-saving drug tax cuts, and pharmacy ITC calculation.
- 5% Concessional Rate: Applies to most finished tablets, capsules, syrups, vaccines, and insulin under HSN 3004.
- 0% Exempt Category: Human blood, plasma, contraceptives, ORS, and notified rare disease medicines.
- Cancer Drug Relief: Major cancer drugs (Trastuzumab, Osimertinib, Durvalumab) reduced from 12% to 5% GST.
- 100% ITC for Chemists: Medical shops on Regular GST can claim input credit on all trade purchases and supplies.
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1. New GST Rate Slabs on Medicines in India (2026)
The GST Council structured medicines under differential slabs to ensure life-saving pharmaceuticals and everyday essential drugs remain accessible to Indian families while wellness and cosmetic goods attract standard revenue rates.
Human blood & its components, All types of Contraceptives, Oral Rehydration Salts (ORS), Notified rare-disease medicines for personal import.
Prescription tablets, capsules, syrups, insulin, vaccines, life-saving cancer drugs (Trastuzumab, Osimertinib, Durvalumab), diagnostic test kits, branded Ayurvedic & Homeopathic medicines under HSN 3004.
Surgical rubber gloves, wadding, medical bandages, adhesive plasters, sterile catgut, medical grade oxygen, diagnostic reagents.
Dietary health supplements, multivitamin effervescent tablets, protein powders, medicated antiseptic soaps, herbal cosmetics.
2. Complete Pharmaceutical HSN Code Directory (Chapter 30)
In the Goods and Services Tax framework, all medical formulations and devices fall under HSN Chapter 30. Businesses must print accurate HSN codes on every tax invoice to ensure smooth GSTR-1 filing.
| HSN Code | Category Name | Description & Medical Scope | Applicable GST |
|---|---|---|---|
| 3001 | Glands and Other Organs (Dried / Extracts) | Extracts of glands or other organs or their secretions for organo-therapeutic uses, heparin and its salts. | 5% |
| 3002 | Human Blood, Vaccines & Toxins | Human blood, animal blood prepared for therapeutic use, antisera, vaccines, toxins, and micro-organism cultures. | 0% (Blood/Plasma) / 5% (Vaccines) |
| 3003 | Medicaments (Unmixed / Bulk Formulation) | Medicaments consisting of two or more constituents mixed together for therapeutic/prophylactic uses, not in measured doses. | 5% |
| 3004 | Medicaments (Finished Retail Formulations) | Finished tablets, capsules, syrups, injections, and ointments in measured doses or retail packings (Allopathic, Ayurvedic, Homeopathic). | 5% |
| 3005 | Wadding, Gauze, Bandages & Dressings | Adhesive dressings, medicated waddings, surgical bandages, poultices, and plaster-impregnated bandages. | 12% |
| 3006 | Pharmaceutical Goods & Diagnostic Reagents | Sterile surgical catgut, blood-grouping reagents, opacifying preparations for X-ray, dental cements, and first-aid boxes. | 12% |
| 2106 / 3304 | Health Supplements & Medicated Cosmetics | Protein powders, fortified energy drinks, cosmetic dermatological soaps, and wellness nutrition items. | 18% |
3. Latest GST Council Updates: Cancer Drugs & Rare Disease Relief
The GST Council made landmark announcements to reduce the financial burden on patients undergoing intensive chemotherapy and life-saving treatments:
HER2-Positive Breast Cancer
GST reduced from 12% to 5%, lowering critical vial treatment costs for thousands of oncology patients across India.
EGFR Non-Small Cell Lung Cancer
Targeted therapy tablet formulation reduced from 12% to 5% GST, ensuring substantial monthly savings on chronic therapy.
Immunotherapy Oncology Infusion
Concessional 5% GST applicable on imported and domestic vials under updated pharmaceutical classification schedules.
4. GST on Ayurvedic, Siddha, Unani & Homeopathic Medicines
The taxation of AYUSH preparations depends on whether they are legally registered medicaments with therapeutic medicinal claims or over-the-counter dietary wellness products:
Classical & Branded Formulations
Branded Ayurvedic medicines, Chyawanprash manufactured under an AYUSH Drug License with therapeutic labeling, and classical homeopathic dilutions attract 5% GST under HSN 3004.
Herbal Wellness & Cosmetics
Herbal cosmetics, skincare oils, beauty creams, and protein supplements sold without therapeutic drug approvals fall under HSN 2106 or 3304 and attract 18% GST.
5. Input Tax Credit (ITC) & Expired Stock Rules for Chemists (Section 17(5)(h))
Managing Input Tax Credit (ITC) correctly is crucial for pharmacy profitability. Pharmaceutical retailers face strict compliance rules regarding purchase credits and stock expiry:
Registered retail chemists can claim 100% ITC on GST paid on medicines, distributor bills, packaging material, refrigeration electricity, and store hardware (thermal printers, barcode scanners, POS systems).
Under Section 17(5)(h) of the CGST Act, if near-expiry medicine is destroyed or written off, the input tax credit previously availed must be reversed in Table 4(B) of GSTR-3B. To avoid tax loss, return expired stock to wholesalers using commercial credit notes.
6. Hospital Pharmacy GST Rules: In-Patient vs Retail Out-Patient
Medicines, implants, and injections administered to admitted hospital patients as part of care packages are treated as composite health care services and are 100% Exempt from GST. No ITC can be claimed by the hospital on these inputs.
Medicines sold across the counter to out-patients or walk-in customers are standard retail supplies, attracting 5% or 12% GST with full eligibility for Input Tax Credit.
7. Mandatory Fields for Pharmacy GST Invoices (Drugs & Cosmetics Act)
Unlike standard retail invoices, pharmaceutical tax invoices must comply with both the CGST Rules (Rule 46) and the Drugs & Cosmetics Rules:
Common Questions on GST on Medicines in India
Clear, practical answers for chemist shop owners, pharmacists, and taxpayers.