GST on Medicines and Medical Supplies in India

Goods and Services Tax in India has taxed at four separate rates NIL, 5%, 12% and 18% on medicines and medical supplies. NIL rate is charged on blood and its by-products, and all contraceptives. The lowest GST rate of 5 % is charged on life-saving drugs like vaccines and medicines like those for tuberculosis, AIDS, diabetes, malaria among others. The highest GST at the rate of 18% is charged only on medicines, like nicotine gums, which contain nicotine polacrilex. Although GST is charged at the rate of 28% on some other products and services under GST but the rate is not charged on any medicines or medical supplies.

Latest Update in Medicines & Medical

12th July 2023

• In the case of personal use, Dinutuximab (Quarziba) is exempted from IGST as per recommended by the 50th GST Council meeting. read more

09th December 2022

• The Supreme Court two-judge bench of Justice C T Ravikumar and Justice M R Shah held that, as it is a policy matter of the Indian Government, it cannot be ordered to issue a Writ of Mandamus requiring the Government to exempt the medicine for Spinal Muscular Atrophy (SMA) from GST. Read PDF

18th July 2022

• The AAR (Authority for Advance Ruling) of Tamil Nadu state has ruled that the medicines and consumables supplied for giving health care services to inpatients are composite supply and draw no GST (Goods and Services Tax) rate. Read order

29th June 2022

• 47th GST Council Meeting Update – GST Rate 5% from 12%
  • “Ostomy Appliances”
  • “Orthopedic appliance- Splints and other fracture appliances; artificial parts of the body; other appliances which are worn or carried, or implanted in the body, to compensate for a defect or disability; intraocular lens”

CAIT Asks Attention on Online e-Pharmacy

The Confederation of All India Traders (CAIT) has once again tried to comprehend the harm of online selling concerned with the retailers of chemists and pharmacy. The CAIT has asked the Piyush goyal Hon’ble Minister for Commerce, to look out for the online e-commerce portals that are doing online pharmacy and giving tough competition to the retailers. Huge discounting is doing much harm to the retailers and this has to be studied with proper caution on the note of the wellness of chemists. Read PDF

1 . NIL Rate of GST on Medicines and other Medical Supplies

• Human blood and its by products used in medicine
• All types of contraceptive goods

2 . 5% Rate of GST on Medicines and other Medical Supplies

The products and medical supplies on which GST at the rate of 5% is charged are:-

• Human/animal blood vaccines
• Oral rehydration salts
• Diagnostic kits for detecting all types of hepatitis
• Cyclosporin
• Formulations manufactured from bulk drugs specified in List 2 of central excise notification 12/2012
• Artificial limbs, wheel chairs, crutches, walking frames, etc.
• Insulin
• Ayurvedic, Siddha, Unani, Homeopathic or Bio-chemic medicines manufactured in accordance with formulations prescribed in appropriate pharmacopoeia/ First Schedule of the Drugs and Cosmetics Act, 1940.
• Artificial kidneys as well as disposable micro barriers/sterilized dialyzers of artificial kidneys
• Medicaments (inclusive of veterinary medicines) used in biochemic medical system
• Deferiprone or Deferoxamine injection
• Medicines or drugs as well as their esters and salts as well as diagnostic test kits (specified in List 1 of central excise notification 12/2012)
• Coronary stents/stent systems for use with cardiac catheters

Many other medicines and supplies are charged GST at the rate of 5% instead of those stated in the list.

Read Also:- GST Impact on Healthcare Industry in India Check out the brief details of GST impact on the healthcare industry in India. The researchers have commented on the impact of GST regime. Read More

3.  12% Rate of GST on Medicines and other Medical Supplies

The products and medical supplies on which GST at the rate of 12% is charged are:-

• Glands (including gland extracts) and various organs (including organ extracts) dried or powdered for organo-therapeutic uses
• Heparin and various heparin salts
• Any human/animal substances used for prophylactic or therapeutic purposes
• Animal blood prepared for diagnostic, therapeutic and prophylactic purposes
• Animal blood fractions including antisera, other blood fractions as well as related immunological products
• Toxins, cultures of microorganisms (excluding yeasts)and similar products for medical use
• Toothpowder
• Ayurvedic, Unani, Bio-chemic, siddha or homeopathic medications for therapeutic/prophylactic use prepared using two or more constituents packed for retail sales as well as not packed for retail sales.
• Bandage, wadding, gauge and similar types of items including dressings, poultices and adhesive plasters for use in surgical, veterinarian, dental or medical procedures (coated/impregnated with pharmaceutical substances)
• Pharmaceutical products such as sterile surgical catgut, sterile absorbable surgical/dental yarns, sterile tissue adhesives for surgical wound closure, sterile luminaria, sterile laminaria tents, waste pharmaceuticals, etc.
• Diabetic foods, blood glucose monitoring system (glucometer) and test strips
• Atrial septal defect occlusion device/Patent Ductus Arteriosus
• Medical grade oxygen, hydrogen peroxide, etc.
• Photographic film/plates for use in medical use X-rays

Many other medicines and supplies are charged GST at the rate of 12% instead of those stated in the list.

4. 18% Rate of GST on Medicines and other Medical Supplies

The products and medical supplies on which GST at the rate of 18% is charged are:-

• Nicotine polacrilex gum
• Preparations for dental/oral hygiene including denture powders and fixative pastes, dental floss, etc. in individual retail packaging (excluding toothpowder)
• Various hair care products (excluding mehndi paste in cones)
• Dental, surgical, medical or veterinary furniture such as hospital beds, operating tables, examination tables etc.

Many other medicines and supplies are charged GST at the rate of 18% instead of those stated in the list.

NIL GST on Medical Services

GST Act, 2017 contains the provisions for the health services for humans and veterinary (animals) both, which states that the services of medical practitioner, licensed medical or paramedical clinic will be charged a GST at NIL rate and will be applied for the services of ambulance for transportation of a patient. The same rate will be applicable on veterinary treatments and services. 

Read Also:- GST Impact on Expired Medicine/Drugs Return Know the GST (Goods & Services Tax) impact on expired medicine drugs return in India. Also, we have published important conditions & consequences. Read More

NIL GST on Hospitalisation

The Authority of Advance Ruling (AAR) in Kerala ordered that GST at the rate on NIL percent will be charged on the medicines and medical supplies, implants and other related tasks at the time of hospitalisation of any individual. AAR said that NIL rate will be applicable as these medicines and supplies were a part of healthcare service provided during hospitalisation. The ruling is applicable to all hospitals and clinics across the country. 

Impact of GST on Medicines and Medical Supplies

The introduction of GST in the place of Value Added Tax (VAT) has removed the cascading of tax on different levels of production and supply of medicines and medical supplies of all kinds. The GST is imposed on medicines in such a way that the prices have remained unchanged in most of the cases. For dietary products, the excise duty is removed and taxes are reduced for the benefit for the consumers. 

The pharmaceutical companies had to warehouse the supplies as a VAT at the rate of 2% was charged for the inter state supplies but with the introduction of GST, the warehousing cost is reduced as benefit of Input Tax Credit is provided and rate of GST is also same throughout all the states. This is the main impact of GST.