GST on Medicines in India (2026): 5% Rate, Nil-Rated Life-Saving Drugs, HSN 3004 and What It Means for PCD Partners

By the Trumac Healthcare team, Panchkula · PCD pharma franchise company since 2007 · Updated 14 November 2026 · About us · WhatsApp +91 90416 77932

GST on medicines in India is now 5%. The rate was cut from 12% with effect from 22 September 2025, and 36 specified life-saving drugs became nil-rated. This guide explains the current rates, the HSN codes, how GST sits inside the MRP, how PTR and PTS change at 5% – and what it means for a PCD franchise partner buying from a company and selling to chemists.

The change came from the 56th meeting of the GST Council (3 September 2025), which moved most goods to two slabs. For the pharma trade it was the biggest tax change since GST began in 2017: the general rate on drugs and medicines fell from 12% to 5%, medical devices and diagnostic kits also moved to 5%, and the 12% rate that most price lists, billing software and older articles still mention no longer applies. (This page replaces our 2017 articles on GST and pharma prices.)

PTR and PTS are always quoted before GST – see PTR full form and formula.

GST rates on medicines after 22 September 2025

The rate applies to the classification of the product, not to the word “medicine” on the label. A nutraceutical, cosmetic or wellness product sold in a pharmacy may fall under a different heading with a different rate, so check each product’s HSN on the supplier’s invoice and with your accountant.

दवाओं पर GST कितना लगता है? (हिंदी में)

22 सितंबर 2025 से ज़्यादातर दवाओं पर GST 5% है (पहले 12% था) – इसमें आयुर्वेदिक, यूनानी, सिद्ध और होम्योपैथिक दवाएँ भी शामिल हैं। कैंसर, दुर्लभ और गंभीर बीमारियों की 36 जीवन-रक्षक दवाओं पर GST शून्य (Nil) है। मेडिकल उपकरण और डायग्नोस्टिक किट पर भी 5%। दवाओं का HSN कोड ज़्यादातर 3004 है।

MRP में GST पहले से शामिल होता है: ₹100 MRP वाली दवा में 5% GST के हिसाब से ₹4.76 टैक्स है। केमिस्ट और डिस्ट्रीब्यूटर अपना मार्जिन GST हटाकर निकालते हैं – देखें PTR और PTS।

Medicine HSN code: 3004 and related headings

GST and MRP: what a chemist and a distributor need to know

• The MRP printed on the pack is inclusive of GST. A retailer cannot charge GST on top of MRP.
• GST contained in an MRP = MRP × 5 ÷ 105. On an MRP of ₹100 that is ₹4.76 (it was ₹10.71 at 12%).
• Within a state, 5% is billed as 2.5% CGST + 2.5% SGST; across states it is 5% IGST.
• For the September 2025 change, NPPA directed manufacturers to revise MRPs from 22 September 2025 and to issue revised price lists to dealers, retailers and drug controllers; re-stickering old stock was not made mandatory, but the lower price had to be passed on.
• For scheduled formulations under the Drugs (Prices Control) Order, the ceiling price fixed by NPPA excludes GST: the MRP can be at most the ceiling price plus the applicable GST, so the GST cut lowered the maximum MRP of those medicines too.

How PTR and PTS change at 5% GST

Margins in the medicine trade are worked out on the MRP excluding GST. With the usual 20% retailer margin and 10% stockist margin, the same ₹100 MRP now leaves more value in the chain because less of it is tax:

Use the PTR PTS calculator to run these figures for any MRP, margin and scheme; it already uses 5% GST by default and also works backwards from the rate you buy at.

What GST means for a PCD franchise partner

• Registration: a PCD partner needs a GST registration along with the drug licence – see the requirements guide and the drug licence guide.
• Buying: the company invoices at the net (PCD) rate plus 5% GST. Trumac Healthcare bills from Panchkula, Haryana, so partners in other states pay 5% IGST and partners in Haryana 2.5% CGST + 2.5% SGST.
• Selling: the partner charges 5% GST to chemists, hospitals and stockists, and the MRP the patient pays stays inclusive of GST.
• Input tax credit: the GST paid on purchases is set off against the GST collected on sales, so on a normal margin the cash GST paid is only on the value the partner adds. Nil-rated life-saving drugs carry no output GST, so input credit on them may have to be restricted – ask your accountant.
• First order: a ₹25,000 first order at net rates carries ₹1,250 of GST at 5% (₹3,000 at the old 12%) – see the PCD franchise cost guide for freight and the full budget.

Common mistakes after the GST change

• Billing software still set to 12% for HSN 3004
• Adding GST on top of MRP instead of treating MRP as tax-inclusive
• Assuming every product in a pharmacy is a “medicine” at 5% – nutraceuticals, cosmetics and devices need their own HSN check
• Charging GST on the 36 nil-rated life-saving medicines
• Working out margins on the MRP including GST, which understates the PTR and PTS

This page explains the general position as of November 2026 for the pharma trade. It is not tax advice; rates and classification follow the CBIC rate notifications (Notification 9/2025 and 10/2025-Central Tax (Rate) and later amendments), so confirm product-specific questions with your chartered accountant.

Frequently asked questions

What is the GST rate on medicines in India now?

Most drugs and medicines attract 5% GST. The rate was cut from 12% to 5% with effect from 22 September 2025 after the 56th GST Council meeting, and 36 specified life-saving medicines (mainly for cancer, rare diseases and other severe chronic conditions) became nil-rated.

Is GST on medicine 5% or 12%?

5%. The 12% rate applied until 21 September 2025 and is now outdated; billing software and price lists should show 5% for medicines classified under HSN 3004 unless the product is in the nil-rated list.

Is GST included in the MRP of a medicine?

Yes. The MRP printed on a pack is inclusive of all taxes, so a chemist cannot add GST on top of MRP. The GST inside an MRP is MRP × 5 ÷ 105 – about ₹4.76 on an MRP of ₹100.

What is the GST on Ayurvedic and homoeopathic medicines?

Ayurvedic, Unani, Siddha, homoeopathic and bio-chemic medicaments that are classified as medicines were also reduced from 12% to 5%. Check the classification of each product – some herbal or wellness products are classified elsewhere.

How do I calculate GST on a medicine bill?

Multiply the taxable value by 5%. Within the same state the 5% is split into 2.5% CGST and 2.5% SGST; for a sale to another state it is 5% IGST. Example: taxable value ₹10,000 → GST ₹500 → invoice ₹10,500.

What GST does a PCD franchise partner pay?

The partner pays 5% GST on the company’s invoice (net rate + 5%), charges 5% GST when selling to chemists or hospitals, and claims the GST paid on purchases as input tax credit. Trumac Healthcare invoices from Panchkula, Haryana, so partners outside Haryana are billed 5% IGST and partners in Haryana 2.5% CGST + 2.5% SGST.

What is the HSN code for medicines?

HSN 3004 covers medicaments put up in measured doses or retail packs – tablets, capsules, syrups, many injections, creams and ointments. Bulk medicaments fall under 3003, vaccines and certain biologicals under 3002, dressings and bandages under 3005 and certain other pharmaceutical goods under 3006.

What is the HSN code for tablets, syrups and injections?

Tablets, capsules, syrups, ointments and most injections put up in measured doses or retail packs are classified under HSN 3004. Vaccines fall under 3002 and bandages and dressings under 3005. Take the exact 8-digit code from your supplier’s invoice for each product.

What happened to stock printed with the old MRP?

NPPA asked manufacturers to revise MRPs from 22 September 2025 and to issue revised price lists to dealers, retailers and drug controllers; re-labelling or re-stickering old stock was not made mandatory, but the lower price had to be passed on to the buyer.

Want our price list with net rates and GST? WhatsApp +91 90416 77932 with your district; we send the latest price list (3000+ products, 15 divisions) and confirm whether monopoly is available. Related: PCD pharma franchise · PTR PTS calculator · franchise cost · product list.