Setting up HSN codes and tax rates
HSN mapping is mandatory at item creation and drives the hsn sheet of your GSTR-1.
Step by Step
- In Masters → Items, set the HSN code (3003, 3004 etc.) for every item.
- Assign the tax rate: 0%, 5% or 18% (GST 2.0 — the 12% slab ended on 22 September 2025; most medicines are now 5%).
- Use Masters → HSN Bulk Update to move every old 12% item to its new rate in one pass.
- Validation refuses to save items without an HSN code — by design.
Current GST Rates for a Pharmacy (GST 2.0)
- 5% — most medicines and formulations (HSN 3003/3004), moved from 12% on 22 September 2025, and many medical devices and diagnostic kits.
- 0% (nil) — 36 life-saving drugs listed in the rate notification.
- 18% — some non-medicine products you may stock. Check each item's HSN against the current notification.
Fixing an Item Master After the Rate Change
- Filter Masters → Items by tax rate 12% — every result needs a new rate.
- Use HSN Bulk Update to set the correct rate per HSN group.
- Check nil-rated drugs individually against the notified list.
- Bill one test invoice and confirm CGST/SGST shows 2.5% + 2.5% on a 5% item.
FAQ
- The old MRP is still printed on my stock — what do I charge? GST applies at the rate on the date of sale. The printed MRP is the ceiling; the reduced tax should reach the customer.
- How many HSN digits do I need? At least 4 digits up to ₹5 crore turnover, 6 digits above. Record the full code from the purchase invoice.
Tip: still stuck? Message us on WhatsApp with a screenshot — most issues are solved in under 10 minutes.