Under the GST system, pharmaceuticals are classified as goods and are subject to GST. This means that manufacturers, distributors, and retailers involved in the pharmaceutical industry are required to comply with GST regulations.

 NIL GST Rate on Medicines and Medical Goods

1. Human blood and its components by products used in medicine

1. All kinds of contraceptives

1. Sanitary napkins or tampons

5% GST Rate on Medicines and Medical Goods

The following are some of the medical products on which 5% GST is levied. This list is not exhaustive.

1. Animal or human blood vaccines

1. Insulin

1. Oral rehydration salts

1. Diagnostic kits for detection of all types of hepatitis

1. Desferrioxamine injection or deferiprone

1. Cyclosporin

1. Medicaments used in biochemic systems and not bearing a brand name

1. Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 1 of the central excise notification 12/2012 such as Dopamine, Penicillamine, Influenza Vaccine, Protamine, BCG vaccine, amongst 200+ other specified drugs

1. Formulations manufactured from bulk drugs specified in List 2 of the central excise notification 12/2012 such as Streptomycin, Pyrazinamide, Hydrocortisone, Quinine, amongst 20+ other specified drugs

1. Artificial kidneys

1. Disposable sterilized dialyzer or micro barrier of artificial kidney

1. Artificial limbs

1. Orthopaedic appliances that include crutches, surgical belts and trusses; splints and other fracture appliances; artificial parts of the body

1. Parts of wheelchairs, tricycles, braillers, crutches, walking frames, etc.

1. Assistive devices, rehabilitation aids and other goods for disabled, specified in List 3  of the central excise notification 12/2012 such as braille writers and braille writing instruments, canes, electronic aids like the sonic guides, braille paper, artificial electronic ears (cochlear implants), amongst 20+ other specified goods

1. Coronary stents/stent systems for use with cardiac catheters

1. Ostomy Appliances

1. Milk food for babies

1. COVID-19 diagnostic test kits

12% GST Rate on Medicines and Medical Goods

The following are some of the medical products on which 12% GST is levied. This list is not exhaustive.

1. Animal blood for therapeutic, prophylactic or diagnostic uses

1. Antisera and other blood fractions and modified immunological products

1. Toxins, cultures of microorganisms (excluding yeasts) and similar products

1. Medicaments comprising two or more constituents which have been mixed together for therapeutic or prophylactic uses (excluding goods under headings 30.02, 30.05 and 30.06), not in measured doses or forms or packings for retail sale. This includes ayurvedic, homoeopathic, unani, siddha, or biochemic systems medicaments. 

1. Medicaments (excluding goods under headings 30.02, 30.05 and 30.06) comprising mixed or unmixed products for therapeutic or prophylactic uses, in measured doses or forms or packings for retail sale. This includes ayurvedic, homoeopathic, unani, siddha, or biochemic systems medicaments.

1. Wadding, bandages, gauze, and similar articles, impregnated or coated with pharmaceutical substances, for retail sale for surgical, medical, dental or veterinary purposes.

1. Pharmaceutical goods specified in Note 4 such as sterile surgical catgut, sterile tissue adhesives for surgical wound closure, sterile laminaria and sterile laminaria tents, etc.

1. Tooth powder 

1. Feeding bottles and nipples of feeding bottles

1. Surgical rubber gloves or medical examination rubber gloves

1. Instruments and appliances used in surgical, medical, dental or veterinary sciences. This includes scintigraphic apparatus and other electro-medical apparatus and sight-testing instruments. 

1. Mechano-therapy appliances; psychological aptitude-testing apparatus; massage apparatus; ozone therapy, oxygen therapy, artificial respiration or other therapeutic respiration apparatus, and aerosol therapy apparatus.

1. Breathing appliances and gas masks, excluding protective masks having neither replaceable filters nor mechanical parts. 

1. Photographic film and plates for x-rays for medical use

1. X-ray machines, and other similar apparatus used for surgical, medical, dental or veterinary uses. 

1. Other drugs and medicines intended for personal use

1. Enzymes and prepared enzymes

1. Contact lenses; spectacle lenses and corrective spectacles

1. Glands and other organs used for organo-therapeutic use, and extracts of glands or other organs or of their secretions for the same purpose

1. Diabetic foods

1. Blood glucose monitoring system (glucometer) and test strips 

1. Medical grade oxygen, medical grade hydrogen peroxide, etc.

18% GST Rate on Medicines and Medical Goods

The following are some of the medical products on which 18% GST is levied. This list is not exhaustive.

1. Products for oral or transdermal application or application otherwise containing nicotine  and intended to assist tobacco use cessation

1. Hygienic or pharmaceutical articles such as teats, hot water bottles, Ice bags, etc.

1. Preparations for oral or dental hygiene and dental floss, sold in individual retail packages

1. Surgical, medical, dental or veterinary furniture such as operating tables, hospital beds, examination tables, etc., with mechanical fittings; dentists' chairs; barbers' chairs, etc.

1. Razors and razor blades

1. Organic surface-active products and preparations for washing the skin, whether or not containing soap

1. Infrared thermometers, pyrometers, barometers, psychrometers and hygrometers.

28% GST Rate on Medicines and Medical Goods

No pharmaceutical products or medicines are taxed at 28% GST. 

GST on Medical Services

All Non-Intensive Care Unit (ICU)/Critical Care Unit (CCU)/Intensive Cardiac Care Unit (ICCU)/Neonatal Intensive Care Unit (NICU) room rents in a hospital or clinical establishment exceeding Rs.5,000 per day will be liable to GST at 5% (without input tax credit). It applies with effect from 18th July 2022.

Any medical services rendered by the following ways will attract a nil GST rate:

1. Use of Intensive Care Unit (ICU) or Critical Care Unit (CCU) or Intensive Cardiac Care Unit (ICCU) or Neonatal Intensive Care Unit (NICU) rooms.

1. Health care services by a clinical establishment, or an authorised medical practitioner or para-medics, except for renting of rooms, other than the above, where the room charges do not exceed Rs.5,000 per day, to a person receiving such health care services. 

1. Transportation of a patient in an ambulance, other than the services specified above.

GST on Hospitalization

The Authority of Advance Ruling (AAR) in Kerala had ruled in 2017 that the supply of medicines, surgical items, implants, stents, and other consumables to a patient during hospitalization will be treated as a composite supply and exempted as per entry in S.No.74 of Notification 12/2017 - Central Tax (Rate) dated 28th June 2017. In June 2022, the Tamil Nadu Authority for Advance Ruling issued a similar ruling.

Created & Posted by Pooja

Income Tax Expert at TAXAJ

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