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HSN Code & GST Rate for Pharmaceutical Products

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Deepshikha Nainani

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What is the GST Rate on Pharmaceutical Products

The Goods and Services Tax (GST) is an indirect tax introduced in India in 2017, designed to replace various taxes such as VAT, service tax, and excise duty. It applies to the supply of goods and services at various stages, from manufacturing to the final consumer, creating a unified taxation system.

GST on the pharmaceutical industry in India is levied under four different tax slabs: NIL, 5%, 12%, and 18%. The applicable rate depends on the type of drugs being supplied. It is important to understand these rates for accurate tax filing and compliance with GST laws, particularly for businesses involved in the sale or distribution of pharmaceutical goods.

NIL GST

Pharmaceutical products exempt from GST include essential items like human blood and contraceptives. Medicines administered during hospitalisation may also qualify for NIL GST.

5% GST

The 5% GST rate applies to the most essential medicines, including life-saving drugs and medicines crucial for public health and wellness. These include vaccines, certain antibiotics, insulin, and drugs for critical illnesses.

12% GST

A 12% GST rate is applicable to medicines and health-related products that are classified as non-essential but are still used for therapeutic or prophylactic purposes.

18% GST

The 18% GST rate applies to non-essential pharmaceutical products that are not considered life-saving but are still used in healthcare. These include surgical instruments and over-the-counter products.

Importance of Understanding GST Rates

It is essential for pharmaceutical businesses to have a clear understanding of GST on pharma companies to ensure compliance with tax laws. Incorrect filings can result in penalties or delays, making it crucial to stay informed about the applicable rates for different pharmaceutical products.

What are HSN Codes

Harmonised System of Nomenclature (HSN) codes are internationally recognised codes used to classify goods systematically. In India, the HSN code for pharmaceutical products is used to determine the applicable GST rate for these goods.

Importance of HSN Codes for GST

HSN codes simplify the process of identifying and applying the correct GST rate for each product. Additionally, they allow the government to track and regulate goods, ensuring uniformity across the country. Businesses can determine the applicable GST rate based on the HSN code, which simplifies tax filing and reduces the risk of classification errors.

List of GST Rates and HSN Codes for Common Pharmaceutical Products

The table below outlines different HSN codes and their corresponding GST rates to assist in classifying pharmaceutical products:

HSN Codes

Description

Rate (%)

Effective Date

3003

Medicaments (excluding goods of heading 3002, 3005, or 3006) consisting of two or more constituents mixed for therapeutic or prophylactic uses

12%

01/07/2017

3004

Medicaments (excluding goods of heading 3002, 3005, or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, in measured doses

12%

01/07/2017

9018

Instruments and appliances used in medical, surgical, dental, or veterinary sciences, including electro-medical and diagnostic apparatus

5% to 12%

01/07/2017

3002

Human blood and its components

NIL

01/07/2017

GST Exemptions for Certain Pharmaceutical Products

Certain pharmaceutical products are exempt from GST in India. These include items such as human blood and contraceptives. Additionally, medicines provided during hospitalisation may qualify for exemption if they are part of composite healthcare services.

How to Determine the Correct HSN Code and GST Rate for Pharmaceutical Products

Here is a step-by-step guide to help businesses stay updated on HSN codes and avoid classification errors, ensuring correct tax filings:

  1. Visit the GST website

  2. Log in to the GST portal using your credentials

  3. Click on Services, then User Services, and select Search HSN Code

  4. On the Search page, you can search by either HSN code or product description, or download the HSN directory in Excel format

  5. Enter the HSN code to find the applicable GST rate

  6. Review the GST rate applicable for the selected product, and repeat the process for additional products as needed

Staying informed about GST on pharmaceutical products is essential for accurate tax filings and compliance

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Hi! I’m Deepshikha Nainani
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Deepshikha is a marketing and communications expert with over a decade of experience across various industries. With expertise in performance content, digital campaigns and brand management, she excels in creating data-driven, creative solutions that drive growth and engagement. Holding certifications in digital marketing and content strategy, she is passionate about combining creativity with analytics to create compelling marketing narratives that resonate. During her downtime, Deepshikha enjoys watching films and documentaries, listening to music, cooking and traveling.

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