Medicine HSN Code: GST Rate, Classification & Invoicing Guide for Businesses

The HSN (Harmonised System of Nomenclature) code for medicines is used to classify pharmaceutical products under Goods and Services Tax (GST), determine the applicable tax rate and ensure accurate invoicing and tax compliance. Most medicines are classified under HSN Chapter 30, Pharmaceutical Products, with specific headings covering medicaments, vaccines, blood products, surgical materials and other pharmaceutical preparations.

The applicable GST rate depends on the product's HSN classification and the relevant government notifications.

What is the HSN code for medicines?

Chapter 30 of the HSN/customs tariff is broken into headings based on the nature of the product. Here are the details:

What GST rate applies to medicines?

From 22 September 2025, most medicines will attract 5% GST, following recommendations from the 56th GST Council Meeting. In addition, 37 specified life-saving medicines, including those used to treat cancer, rare diseases and certain chronic conditions, are exempt from GST (Nil rate).

The government retained a 5% GST on most medicines rather than fully exempting them, so manufacturers can continue to claim input tax credit (ITC). This helps reduce production costs and limits the impact of tax costs on medicine prices.

Note: While most medicines now fall under the 5% GST rate, a few pharmaceutical or pharma-adjacent products continue to attract the 18% GST rate. One commonly cited example is nicotine polacrilex gum, which falls outside the standard medicine category.

What are the HSN code requirements on GST invoices?

The HSN code required on a GST invoice depends on your Aggregate Annual Turnover (AATO) in the preceding financial year. Businesses must print the prescribed number of HSN digits on invoices and report them in GST returns in accordance with CBIC Notification No. 78/2020-Central Tax.

A few compliance details that pharma businesses frequently get wrong:

• Table 12 of GSTR-1 is mandatory for all taxpayers: Since 1 January 2024, all registered taxpayers must report HSN-wise details in Table 12 of GSTR-1, regardless of turnover.
• HSN codes must be selected from the GST portal: Under the Phase 3 rollout, manual entry of HSN codes and descriptions is no longer permitted. Taxpayers must select a valid HSN code from the portal's dropdown list, after which the description is auto-populated.
• B2B and B2C supplies are reported separately: Table 12 contains separate sections for B2B and B2C transactions, and the GST portal validates these values against other GSTR-1 tables before submission.
• Composition taxpayers must also report HSN codes: Although composition dealers issue a Bill of Supply instead of a tax invoice, they must comply with the applicable HSN digit requirement based on their turnover.
• HSN digit requirements are based on the previous financial year's AATO: The applicable 4-digit or 6-digit requirement remains unchanged throughout the year, even if turnover changes.
• Table 13 document reporting is mandatory where applicable: Taxpayers reporting B2B or B2C supplies must also complete the required document details in Table 13.

What should pharma businesses check before issuing a GST invoice?

To prepare a GST-compliant invoice for medicines, verify the following before issuing the invoice:

• Use the correct HSN code at the applicable digit level (4, 6 or 8 digits) based on your turnover and the nature of the transaction.
• Verify the applicable GST rate against the specific HSN tariff item. Do not assume all products under the same 4-digit HSN heading attract the same GST rate, as nil-rated, 5% and 18% items may coexist.
• Apply the correct GST type: Charge CGST and SGST for intra-state supplies, and IGST for inter-state supplies and exports.
• Maintain accurate product classification: Record brand status and packaging, as these may affect the classification of Ayurvedic, Unani and Siddha medicines.
• Follow the revised pricing guidance: Following the September 2025 GST rate change, medicines already released into the market before 22 September 2025 did not require MRP re-labelling, provided manufacturers and marketing companies ensured price compliance through approved measures such as supplementary price lists.
• Claim ITC correctly: ITC is generally available on taxable supplies but not on nil-rated or exempt supplies. Businesses making exempt supplies may also need to reverse proportionate ITC on common inputs, where applicable.

What is the penalty for incorrect invoicing

Incorrect invoicing can attract a general penalty of up to ₹25,000 under Section 125 of the CGST Act, depending on the nature of the non-compliance. In addition, using an incorrect HSN code on a B2B invoice can delay or deny the buyer's ITC claim until the error is corrected, even though the mistake originated with the seller.

Conclusion

Using the correct HSN code for medicines is essential for accurate GST classification, invoicing and tax reporting. Regularly reviewing product classifications, applying the correct GST rates and following HSN reporting requirements can help businesses avoid compliance issues, minimise reconciliation errors and maintain accurate financial records.

TallyPrime simplifies HSN-based invoicing, GST reporting and inventory management, enabling pharma businesses to manage compliance efficiently while supporting smoother day-to-day operations.