GST for Pharma Distributors in India: Rates, HSN, E-Invoice

Most medicines in India now carry 5% GST. The 56th GST Council meeting in September 2025 cut GST on "all other drugs and medicines from 12% to 5%", moved 33 life-saving drugs from 12% to nil and three drugs for cancer, rare and severe chronic diseases from 5% to nil. The changes took effect on 22 September 2025. For a distributor, getting the rate right is only the start. HSN codes, returns, e-invoices and e-way bills all need to line up.

What GST rates apply to medicines and medical products?

The table summarises the health-related changes announced by the GST Council. The legal rates are in CBIC's rate notifications, mainly Notification No. 9/2025-Central Tax (Rate) for rates and No. 10/2025-Central Tax (Rate) for exemptions, both dated 17 September 2025, with matching IGST and state notifications.

Category (as described by the GST Council)	Before 22 Sep 2025	From 22 Sep 2025
33 specified life-saving drugs and medicines	12%	Nil
3 specified drugs for cancer, rare and severe chronic diseases	5%	Nil
All other drugs and medicines	12%	5%
Various medical apparatus and devices for medical, surgical, dental or veterinary use or physical or chemical analysis	18%	5%
Medical supplies such as wadding, gauze, bandages, diagnostic kits and reagents, glucometers	12%	5%

Treat this as a map, not a rate card. The exact rate depends on the product's HSN entry and on whether it appears in the exemption list. Products that are cosmetics, toiletries or general consumer goods, even when sold through a pharma distributor, follow their own entries. Check each SKU against the notifications or the GST Council FAQs, and ask your GST adviser about borderline items.

What is HSN Chapter 30?

Chapter 30 of the HSN covers pharmaceutical products. The main headings are:

Heading	Broad description
3001	Glands and other organs for organo-therapeutic uses; extracts
3002	Human and animal blood preparations, antisera, vaccines, toxins and similar products
3003	Medicaments not put up in measured doses or retail packing
3004	Medicaments put up in measured doses or in forms or packings for retail sale
3005	Wadding, gauze, bandages and similar articles for medical use
3006	Other pharmaceutical goods, such as sterile surgical sutures and first-aid boxes

Most finished formulations a distributor handles fall under 3004. Medical devices, diagnostic equipment and many consumables sit in other chapters (for example Chapter 90), so do not assume everything on your price list is Chapter 30. Invoices and returns must show HSN codes at the number of digits required for your turnover; confirm the current requirement on the GST portal.

Which returns does a distributor file?

GSTR-1: outward supplies, invoice by invoice for B2B sales, with credit and debit notes and an HSN-wise summary.
GSTR-3B: summary return used to pay tax and claim input tax credit.
GSTR-2B: auto-drafted statement of inward supplies, used to check which purchase credits are available.
Annual return: GSTR-9, and GSTR-9C where applicable.

Smaller taxpayers may opt for quarterly filing with monthly payment under the QRMP scheme. Due dates change from time to time, so follow the GST portal rather than a fixed calendar.

When is e-invoicing mandatory?

Notification No. 10/2023-Central Tax (10 May 2023) extended e-invoicing, from 1 August 2023, to registered persons whose aggregate turnover in any financial year from 2017-18 onwards exceeded ₹5 crore. Once you cross the threshold in any year, e-invoicing applies to your B2B invoices, credit notes and debit notes. Sales to unregistered customers (B2C) are outside e-invoicing.

An e-invoice is reported to the Invoice Registration Portal (IRP), which returns an Invoice Reference Number (IRN) and a signed QR code for printing on the invoice.

There is also a reporting time limit. GSTN announced that from 1 April 2025, taxpayers with annual aggregate turnover of ₹10 crore and above cannot report a document to the IRP more than 30 days after its date. Build IRN generation into billing rather than doing it in batches at month end.

What are the e-way bill basics?

When it is needed. Under Rule 138 of the CGST Rules, an e-way bill is generally required to move goods where the consignment value exceeds ₹50,000. Intra-state rules can differ by state.
Part A. Invoice details, GSTINs, delivery place, value and HSN. For e-invoiced documents, Part A can be generated from the IRN details.
Part B. Vehicle number or transport document, which activates the e-way bill.
Validity. Depends on distance and cargo type; extend it before expiry if delivery is delayed.
Cancellation. Possible only within a short window after generation and if the goods have not moved.

The e-way bill system publishes the current rules, validity periods and state-specific notes.

How are returns and expired goods treated?

Sales returns from chemists are normally handled with credit notes under Section 34 of the CGST Act, which must be issued within the statutory time limit to adjust tax. For time-expired drugs, CBIC Circular No. 72/46/2018-GST allows either a fresh tax invoice by the returning party or a credit note by the original supplier.

Rate changes add a wrinkle. Goods sold at 12% before 22 September 2025 and returned afterwards should be credited at the rate charged on the original invoice. Check with your adviser how to handle these returns in your GSTR-1.

What should a distributor check every month?

New products: HSN code and rate set on the item master before first sale.
Rate master: matches current notifications, with the effective date recorded.
E-invoices: every B2B invoice and credit note has an IRN; none are near the 30-day limit.
E-way bills: generated for qualifying dispatches and closed or extended as needed.
Input tax credit: purchase register matched to GSTR-2B, with differences followed up with suppliers.
Credit notes: linked to original invoices and within Section 34 timelines.

How Asli Pharma ERP helps

Asli Pharma ERP's India GST edition covers CGST, SGST and IGST, HSN codes, GSTR-1 and GSTR-3B data, e-invoice and e-way bill. It is currently in early access, not general availability, so confirm the features you need with us and keep your adviser involved while it matures. Batch, expiry and FEFO controls from the core ERP apply to Indian operations as well.

Frequently asked questions

What is the GST rate on medicines in India now?

Following the 56th GST Council meeting, GST on drugs and medicines was cut from 12% to 5% with effect from 22 September 2025. Thirty-three life-saving drugs moved from 12% to nil and three from 5% to nil. Always check the specific product against the current rate notifications, as some items fall under other entries.

Which notifications give effect to the September 2025 rates?

Notification No. 9/2025-Central Tax (Rate) and Notification No. 10/2025-Central Tax (Rate), both dated 17 September 2025, set the new goods rates and the exemptions, with corresponding integrated and state notifications. The exempt drugs are listed in an annexure to the exemption notification.

When is e-invoicing mandatory for a pharma distributor?

Under Notification No. 10/2023-Central Tax, e-invoicing applies from 1 August 2023 to registered persons whose aggregate turnover in any financial year from 2017-18 exceeded ₹5 crore. It covers B2B invoices, credit notes and debit notes.

Is there a time limit to report e-invoices?

Yes, for larger taxpayers. GSTN announced that from 1 April 2025 taxpayers with AATO of ₹10 crore and above cannot report invoices or credit and debit notes to the IRP more than 30 days after the document date.

When is an e-way bill needed?

Generally when goods worth more than ₹50,000 per consignment are moved, under Rule 138 of the CGST Rules. Some states set different rules for intra-state movement, so check the e-way bill portal for your state.

GST for pharma distributors in India