Medicine GST Rate List 2026: Nil, 5% & 18% + HSN Codes

Anil runs a chemist shop in Bhopal. In October last year his supplier's invoices started showing 5% on items that had been 12% the month before. He assumed the distributor had made an error, called to complain, and kept billing his own customers at the old rate for another eleven weeks. By the time his accountant caught it, he had collected roughly ₹47,000 more tax than he was supposed to. That money was not his to keep and not simple to return. Every customer who bought a strip of tablets in those eleven weeks had overpaid by a few rupees.

The rates changed on 22 September 2025. A lot of medical stores, and a surprising amount of published material, still have not caught up.

Customer stories on this blog are representative of feedback from Accountune users. Names and identifying details have been changed.

Accountune is cloud GST billing, inventory and accounting software built in Jaipur since 2017, used by more than 12,000 Indian small businesses, including medical and chemist shops.

What is the GST rate on medicines in 2026?

Quick answer: Most finished medicines are taxed at 5% GST. A notified list of 36 lifesaving drugs is exempt at Nil. Select pharmaceutical inputs remain at 18%. The 12% slab was removed on 22 September 2025 and no longer applies to any medicine. In Accountune the rate is pulled from the item's HSN code, so it updates once instead of being remembered on every bill.

What changed on 22 September 2025

The 56th GST Council meeting produced the largest restructuring of GST since 2017. Four slabs became three, plus Nil and a 40% rate for sin and luxury goods.

For a medical store, four changes matter, and together they reset the GST rate on medicines and on almost everything sold alongside them:

• Most drugs and medicines went from 12% to 5%. This is the change that affects almost every line on a chemist's bill.

• Medical apparatus and devices went from 18% to 5%. Instruments used for medical, surgical, dental, veterinary, and physical or chemical analysis purposes were all reduced.

• Diagnostic kits, bandages, thermometers and medical oxygen moved to 5%.

• A notified list of lifesaving drugs went to Nil.

The change was not a small adjustment. On a ₹1,000 medicine bill, the tax moved from ₹120 to ₹50. A shop that kept billing at the old rate for a quarter was over-collecting from every customer who walked in.

The 33 versus 36 versus 37 confusion, settled

If you have searched this before, you have seen three different numbers for how many lifesaving drugs are exempt. Some articles say 33. Some say 36. Some say 37. They cannot all be right, and the disagreement has a simple cause.

The Council announced two separate moves on the same day, and most publishers reported only one of them.

So both 33 and 36 are defensible, depending on what you are counting, and neither is the whole picture on its own. 33 is the number that moved out of the 12% slab. 36 is the total number of drugs now at Nil. Anyone quoting a single number without saying which group they mean is repeating half of an announcement.

The practical point for a chemist: do not assume a drug is exempt because it is expensive or because it treats a serious illness. The list is specific and set by notification. Check the individual product rather than the category.

Medicine GST rate list 2026

One caution that most rate lists skip. Chapter 30 spans more than one rate, and a single broad category can contain products at different rates depending on the specific tariff entry. A table like the one above is a starting point, not a substitute for checking the individual product. Confirm each item against the CBIC rate finder or the HSN code finder before you set it in your billing system.

Medicine HSN codes: Chapter 30

The medicine HSN code decides the rate, so getting it right at the product level is what keeps every future bill correct. Medicines and pharmaceutical products fall mainly under Chapter 30 of the HSN schedule, and these are the codes a retail chemist meets most often:

Medical devices and instruments sit in Chapter 90 rather than Chapter 30, which is why they were governed by a different rate before September 2025.

The distinction between 3003 and 3004 catches people out. If the medicine is in a retail pack with a measured dose, which is nearly everything on a chemist's shelf, it is 3004. Bulk and unmeasured preparations are 3003. Getting this wrong does not usually change the rate now that both sit at 5%, but it does create classification mismatches in your returns.

GST rate on medical devices and equipment

This is the change most shops missed, because it did not affect medicines directly.

Medical apparatus and devices used for medical, surgical, dental or veterinary purposes, and instruments for physical or chemical analysis, were reduced from 18% to 5%.

That covers a wide range of what a medical store actually sells alongside medicines: BP monitors, glucometers, nebulisers, thermometers, surgical instruments, and diagnostic equipment. Devices sit in Chapter 90, mainly under headings 9018, 9019, 9021, 9022 and 9027.

If your billing system was set up before September 2025, these items are very likely still carrying 18% or 12%. They are the easiest thing to miss, because a chemist checks medicine rates and assumes the rest is unchanged.

GST rate on Ayurvedic, Unani, Siddha and Homoeopathic medicines

All four are at 5%, the same rate as allopathic medicines.

This one is worth stating plainly because it is where published information is most contradictory. Ayurvedic preparations were previously at 12%, and a great deal of content still shows that figure, including some rate tables published well into 2026. Under GST 2.0 they moved to 5% along with the rest of the finished-medicine category.

If you stock Ayurvedic or Homoeopathic lines alongside allopathic, check those items specifically in your billing system. They are frequently the last ones updated, because they sit in a separate part of the item master.

Is there still 12% GST on medicines?

No. The 12% slab was removed entirely on 22 September 2025. It does not apply to medicines, to medical devices, or to anything else.

This matters more than it sounds, because a lot of software and a lot of published rate tables still carry it. If your billing system offers 12% as an option on a medicine line, either the tax master has not been updated or the software is out of date. Either way, an invoice raised at 12% today is wrong, and the excess collected is not yours to keep.

The same applies to 28%, which was also removed. If you sell items that used to be at 28%, they have moved too.

What a medical store should do now

Five things, in order.

1. Open your item master and filter by tax rate. Any item still showing 12% or 28% needs to be corrected.

2. Check the device and equipment section separately. BP monitors, glucometers and nebulisers moved from 18% to 5% and are commonly missed.

3. Check Ayurvedic and Homoeopathic lines separately for the same reason.

4. Verify your exempt items against the notified list, rather than assuming that expensive or serious-illness drugs are exempt.

5. Reconcile the period since 22 September 2025. If you over-collected, your accountant needs to know before it shows up in a return comparison.

If your items carry HSN codes properly, most of this is a filter and a bulk edit rather than a line-by-line review. That is the practical argument for setting HSN codes once at the product level: a rate revision becomes a single update instead of a month of corrections. Our guide to the best billing software for a medical store compares how the main options handle this.

Input tax credit for a medical store

A GST-registered chemist can claim input tax credit on medicines and supplies bought for resale, provided the supplier's invoice appears in your GSTR-2B.

Two points specific to a pharmacy:

• Exempt items break the ITC chain. You cannot claim credit on inputs attributable to exempt supplies. If you sell notified Nil-rated lifesaving drugs, the ITC on those purchases is not available, and proportionate reversal applies.

• The 5% rate on outputs with 18% on some inputs creates an inverted duty situation for some businesses in the pharma chain. Retail chemists are rarely affected, but distributors and manufacturers should check whether a refund claim applies.

Five costly mistakes on medicine GST

1. Not updating the tax master after 22 September 2025. The most common and the most expensive. Every bill raised at the old rate is a rupee collected that you have to account for.

2. Assuming all lifesaving drugs are exempt. Only the notified list is. Check the product, not the category.

3. Copying the HSN code from the supplier's invoice. If the supplier classified it wrongly, you inherit the error and it becomes yours on your return.

4. Updating medicines but forgetting devices. BP monitors and glucometers came down from 18% to 5%. They sit in a different chapter and a different part of your item master.

5. Leaving Ayurvedic lines at 12%. They moved to 5% with everything else. Because they are often entered separately, they are often updated last, or not at all.

Anil, from the opening, now filters his item master by tax rate at the start of every quarter. It takes about ten minutes and it would have saved him ₹47,000.