GST resources
GST on Medicines and Pharmacy Goods
The September 2025 changes cut GST on most medicines from 12% to 5% and made 36 life-saving drugs tax-free. For a pharmacy that means new rates on the shelf, a mix of taxable and nil-rated sales, and careful handling of returns on old bills.
Rates for a pharmacy
| Goods | Before 22 Sep 2025 | Now |
|---|---|---|
| Most medicines (allopathic, in doses) | 12% | 5% |
| 33 notified life-saving drugs | 12% | Nil |
| 3 drugs for cancer and rare diseases | 5% | Nil |
| Ayurvedic, Unani and homoeopathic medicines | 12% | 5% |
| Thermometers, medical oxygen, surgical instruments, diagnostic kits | 12% | 5% |
| Medical, dental and veterinary devices | 18% | 5% |
| Spectacles and corrective goggles | 12% | 5% |
| Soap, shampoo, toothpaste sold at the counter | 18% or 12% | 5% |
Summary of the 56th GST Council announcements. Confirm each product's rate from its HSN entry and the notified list of nil-rated drugs.
Worked example: a counter bill
A pharmacy in Mysuru sells a strip of tablets with an MRP of ₹105, inclusive of 5% GST: taxable value ₹100, CGST ₹2.50, SGST ₹2.50. On the same bill a glucometer at MRP ₹1,050 has a taxable value of ₹1,000 and GST of ₹50, and a nil-rated life-saving injection at ₹4,000 carries no tax. The bill total is ₹5,155, with GST of ₹55.
A customer returns a strip bought in August 2025, when the rate was 12%. The credit note must reverse tax at 12%, the rate on the original invoice, not today's 5%.
Input credit when some sales are nil-rated
Nil-rated drugs are exempt supplies, so input credit on them is not allowed, and credit on common costs such as rent and the billing system must be split between taxable and nil-rated sales. If 10% of a month's sales are nil-rated drugs and common GST is ₹3,000, then ₹300 is reversed. Credit on 5% medicines bought for resale is claimed as usual.
Other rules a pharmacy follows
- Batch number and expiry are not GST requirements, but the drug rules and good practice expect them on records
- Medicines supplied to in-patients as part of hospital treatment are part of exempt healthcare; over-the-counter sales are not
- MRP is the maximum; a pharmacy may sell below it, and GST is worked out on the actual price
- The drug licence number is commonly printed on bills and is required on some documents under the drug rules
Common mistakes
- Leaving 12% on medicine items in the billing software
- Charging 5% on a nil-rated life-saving drug
- Claiming full credit on common costs while selling nil-rated drugs
- Issuing credit notes for old invoices at the new rate
- Assuming cosmetics are at 5% because they are sold in a pharmacy; many are not
How it shows up in returns
Taxable medicine sales go in GSTR-1 by rate and by HSN in the HSN summary; nil-rated drugs go in table 8 as nil-rated supplies. Credit notes for old invoices are reported at the old rate against the original invoice.
Pricing after a rate cut
When the rate falls, the price before GST stays what you agreed with your supplier, and the customer pays less tax. A strip that cost ₹112 at 12% (₹100 + ₹12) costs ₹105 at 5% (₹100 + ₹5). Packs printed with the old MRP can be sold below it, because MRP is a maximum.
Update the GST rate on every item in the billing system on the day the rate changes, and check a few common products by HSN against the notification. A pharmacy with thousands of items is better off updating by HSN in bulk than one product at a time.
How TripleBill helps
TripleBill's pharmacy mode (Pro) records batch, expiry and MRP on purchase bills, sells nearest-expiry first, blocks expired batches, supports schedule H / H1 / X marking and prints DL numbers on invoices. Each item carries its own GST rate, including nil.
This page is general information about GST in India, not tax advice. Rates, thresholds and rules change; confirm with the GST portal or a chartered accountant before acting.
Last reviewed and sources
Last reviewed: November 2026. Facts on this page were checked against:
- Notification No. 9/2025-Central Tax (Rate), 17 September 2025 (chapter 30 and medical devices)
- PIB release on the 56th GST Council recommendations, September 2025
- CGST Rules, 2017, rule 42 (reversal of common credit)
- CGST Act, 2017, section 34 (credit notes)
Frequently asked questions
What is the GST rate on medicines now?
5% for most medicines since 22 September 2025, down from 12%. 36 life-saving drugs are nil-rated.
Are Ayurvedic medicines taxed at 5%?
Yes, Ayurvedic, Unani and homoeopathic medicines moved to 5%.
What is the GST on glucometers and thermometers?
5%, after the September 2025 changes.
Can a pharmacy claim input credit?
Yes, on taxable medicines and costs used for taxable sales. Credit linked to nil-rated drugs must be reversed.
Is GST charged on MRP or on the selling price?
On the actual selling price. If you sell below MRP, GST is on the lower price.
What rate applies to a return of a medicine bought before September 2025?
The rate on the original invoice, usually 12%.
Do medicines sold to a hospital carry GST?
A sale of medicines by a pharmacy or distributor to a hospital is a taxable sale at the medicine's rate. The hospital's treatment of in-patients is a separate, exempt healthcare service.
Is GST charged on medicines given free with a prescription by a doctor?
Free samples given without consideration are generally not a supply, but input credit on goods given away free is blocked. Ask a chartered accountant about your specific scheme.
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