Gujarat is one of India’s biggest pharma hubs, and pharma GST has its own shape: medicines sit at concessional rates, a large share of output is exported, and the input base is taxed higher than the output — creating refundable credit that many units never claim.
Rates on medicines
Most formulations and medicines are taxed at 12%, many essential and a set of listed life-saving drugs at 5%, and a few products at 18%. Active pharmaceutical ingredients (APIs) and many inputs are largely at 18%. Because the exact rate depends on the specific product and its classification, correct HSN mapping (3003/3004 and related) is the foundation — misclassification is a common source of demand notices.
The inverted-duty refund pharma misses
Here is the money point: when your inputs (APIs, excipients, packaging) are taxed at 18% but your finished medicine is at 5% or 12%, unused input credit accumulates — the classic inverted duty structure. That credit is refundable, and for a manufacturer it can be substantial. Alongside export refunds, this is where a pharma unit recovers real working capital. We identify and file these refunds.
Exports, job work and loan licensing
- Exports are zero-rated — shipped under LUT with input-credit refunds
- Loan licensing and third-party/job-work manufacturing need correct challan tracking
- Distributors and stockists run on tight ITC reconciliation against GSTR-2B
- Expiry, returns and credit notes must be handled cleanly in returns