Medicine HSN Code 3004: GST Rate, Exemptions & Classification

What is HSN Code 3004?

HSN Code 3004 applies to “Medicaments (excluding goods of headings 3002, 3005, or 3006), consisting of mixed or unmixed products for therapeutic or prophylactic uses.” Essentially, it covers all finished medicines that are manufactured, packaged, and ready for retail sale—whether allopathic, ayurvedic, homoeopathic, or veterinary.

This category includes tablets, capsules, syrups, ointments, injectables, and topical applications used for treating or preventing diseases.​

GST Rates & Exemptions for Medicines under HSN Code 3004

Under the GST framework, the tax rates for medicines are determined by their importance in public healthcare and therapeutic use. After the 56th GST Council meeting (September 2025), several life-saving drugs were made GST-free, while commonly prescribed and OTC (over-the-counter) medicines continue under 5% and 12% slabs.​

As per the latest GST revision (effective 22 September 2025), the Government of India reduced GST to nil for 33 critical life-saving medicines and to 5% for essential healthcare products, ensuring affordability and accessibility.​

Table Notes

• The majority of therapeutic and curative medicines are charged at 5% or 12%.
• Exemptions apply primarily to life-saving drugs, vaccines, and AYUSH formulations used under public health schemes.
• No compensation cess applies to medicines.
• Raw materials for bulk drugs may have separate GST rates (usually 18%) depending on classification.

GST Rates Applicable Under 3004

What’s Included Under HSN 3004 Products?

This HSN covers all finished pharmaceutical formulations ready for direct consumption. That includes:

• Prescription allopathic medicines
• Traditional medicines (Ayurvedic, Unani, Homeopathic)
• Veterinary and preventive medicines
• Generic drugs, branded tablets, and syrups

Excluded from this category are items under headings:

• 3002: Sera and vaccines (biologicals)
• 3005: Wadding, gauze, and bandages
• 3006: Pharmaceutical goods used in hospitals.​

Explore Gimbooks HSN/SAC code & GST Rate finder

Key Exemptions Under GST for Medicines

The Government exempts several life-saving and government-supplied drugs to improve accessibility:

• Cancer, HIV/AIDS, and TB medications (Nil rated or 5%)
• COVID-19, Polio, and Measles vaccines (Nil rated)
• Drugs supplied under Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP)
• Medicines distributed through public hospitals and healthcare schemes.​

Recent Exemptions (Post-September 2025)

• GST reduced from 12% to Nil on 33 life-saving drugs treating cancer, renal disorders, epilepsy, heart conditions.
• GST from 5% to Nil on 3 additional essential medicines under the National Health Mission.​

Input Tax Credit (ITC) Rules for Medicines

Registered manufacturers, distributors, and pharmacies can claim Input Tax Credit (ITC) for GST paid on raw materials, packaging materials, and logistics services used in producing and distributing taxable medicines.However:

• ITC cannot be claimed for medicines sold under GST-exempt or Nil-rated categories.
• Businesses dealing in both taxable and exempt drugs must maintain separate accounting to ensure compliance under Section 17 of the CGST Act.​

GST on Medicine Billing: Practical Scenarios

• A pharmacy selling antibiotics (12% GST) can claim ITC on invoices from manufacturers or wholesalers.
• A government supply distributor invoicing cancer drugs (0% GST) cannot claim ITC on inputs.
• Ayurvedic manufacturers under the AYUSH Ministry charge 12% GST on formulations but can claim ITC on herbal ingredients.

Common Mistakes in Medicine GST Filing

• Incorrect HSN use for biologicals (should be 3002, not 3004).
• Claiming ITC for exempted life-saving drugs.
• Calculating GST over marked MRP (GST is already included in printed MRP).
• Not segregating mixed sales (taxable vs non-taxable) in GST returns.

Conclusion

HSN Code 3004 standardizes classification and GST compliance for finished medicines and pharmaceutical formulations. With revised rates (2025) providing Nil to 12% GST depending on category, the system balances affordability for patients and compliance simplicity for healthcare businesses. Medical suppliers and distributors should stay updated on GST Council notifications to ensure accurate billing, reporting, and ITC claims.​

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FAQs: HSN Code 3004 & Medicine GST

What is HSN 3004?

HSN 3004 includes finished medicaments in measured doses (tablets, syrups, capsules) used for therapeutic or preventive purposes.

What is the GST rate for medicines under HSN 3004?

As of 2025, GST on medicines ranges from 0% (exempt) for life-saving drugs, 5% for essential medicines, and 12% for general medicines and formulations.

Are traditional medicines like Ayurvedic or Homeopathic taxed?

Yes, Ayurvedic, Unani, Siddha, and Homeopathic medicines are taxed at 12% under HSN 3004.

Can Input Tax Credit be claimed on medicine supplies?

ITC is available only for taxable categories (5% or 12%) and not for Nil-rated or exempted medicines.

Which life-saving drugs are GST-exempt?

Cancer, HIV/AIDS, TB drugs, vaccines, and medicines under government schemes such as PMBJP are exempt from GST.