Ayurvedic medicines have been an integral part of India's traditional healthcare system for centuries. With the implementation of the Goods and Services Tax (GST) in 2017, the taxation structure for Ayurvedic medicines has undergone significant changes. In this article, we will delve into the GST rates applicable to Ayurvedic medicines, their HSN codes, and the special conditions or exemptions that apply to them.
Ayurvedic medicines are taxed at 5% with effect from 22 September 2025, under HSN 3004 (retail packings) or 3003 (bulk, not put up for retail sale). The rate was 12% from 1 October 2021 to 21 September 2025 and 5% before that. Ayurvedic patent and proprietary medicines manufactured in accordance with the authoritative books specified in the Drugs and Cosmetics Act, 1940 are covered by the same 5% entry. The effective date of this rate is July 1, 2017. To calculate the total GST amount, you can use our GST calculator widget below.
function calculateGST() { var basePrice = document.getElementById("base-price").value; var gstRate = 0.12; var gstAmount = basePrice * gstRate; document.getElementById("gst-amount").innerHTML = "Total GST amount: ₹" + gstAmount.toFixed(2); }
The GST tax structure for Ayurvedic medicines differs based on whether the manufacturer or supplier is registered under the composition scheme or the regular scheme. The composition scheme is available for businesses with an annual turnover of up to ₹1.5 crore, while the regular scheme applies to businesses with an annual turnover exceeding ₹1.5 crore.
| Scheme | GST Rate | HSN Code | Effective Date |
|---|---|---|---|
| Composition Scheme | 1% | 3004 | July 1, 2017 |
| Regular Scheme | 5% | 3004 | 22 September 2025 (12% from 1 October 2021 to 21 September 2025) |
Prior to the implementation of GST, Ayurvedic medicines were subject to various taxes, including excise duty, VAT, and sales tax. The pre-GST tax regime was complex, with different tax rates applicable in different states. Ayurvedic medicines sit in the 5% slab following the September 2025 rationalisation, which moved medicines generally from 12% to 5% (with specified life-saving drugs at Nil).
The pre-GST tax regime also had a higher tax burden, with an effective tax rate of around 15-20% for Ayurvedic medicines. In contrast, the GST regime has a lower tax burden, with an effective tax rate of 5%.
Here are some frequently asked questions regarding input tax credit and compliance for Ayurvedic medicines:
Input tax credit is available on the inputs and input services used in supplying Ayurvedic medicines, at the rates applicable to those inputs — for example 18% on many raw materials. Input tax credit is not itself a fixed percentage.
The compliance requirements for Ayurvedic medicines under GST include registration, invoicing, and return filing. Manufacturers and suppliers must register for GST if their annual turnover exceeds ₹40 lakhs.
Yes, there are special conditions and exemptions applicable to Ayurvedic medicines. For example, Ayurvedic medicines that are classified as "herbal" or "natural" products are exempt from GST.
To avoid common billing mistakes and ensure compliance with GST regulations, follow these tips:
In conclusion, the GST rate for Ayurvedic medicines in India is 5% with effect from 22 September 2025 (it was 12% from 1 October 2021 to 21 September 2025), with an HSN code of 3004. The composition scheme and regular scheme have different GST rates, with the composition scheme applicable to businesses with an annual turnover of up to ₹1.5 crore. The GST regime has simplified the tax structure, with a uniform GST rate applicable across India. By following the compliance tips and understanding the tax structure, manufacturers and suppliers of Ayurvedic medicines can ensure compliance with GST regulations and avoid common billing mistakes.
The GST rate applicable to Ayurvedic medicines is 5%
Yes, Ayurvedic medicines have a specific HSN code of 3004
Yes, there are exemptions and special conditions for Ayurvedic medicines under GST
The implementation of GST has simplified the taxation structure for the Ayurvedic medicine industry
No, not all Ayurvedic medicines are subject to the same GST rate, some may be exempt or have a lower rate
Rate position checked against the CBIC rate notifications (Notification No. 9/2025-Central Tax (Rate) dated 17 September 2025, effective 22 September 2025, and the notifications it supersedes) and the GST Council's 56th meeting recommendations.
