VAT ON MEDICATED SOAP
This query is : Resolved
23 January 2010
SIR ,
WE ARE SELLING MEDICATED SOAP MANUFACTURED UNDER DRUG APPROVAL & WE HAVE APPROVAL UNDER DRUG ACT.GENERALLY VAT TAX ON SOAP IS 12.5 % .HOWEVER VAT TAX RATE FOR MEDICINE IS 4% .WHAT TAX RATE WILL CHARGED FOR THE MEDICATED SOAP.
THANX & REGARD
WE ARE SELLING MEDICATED SOAP MANUFACTURED UNDER DRUG APPROVAL & WE HAVE APPROVAL UNDER DRUG ACT.GENERALLY VAT TAX ON SOAP IS 12.5 % .HOWEVER VAT TAX RATE FOR MEDICINE IS 4% .WHAT TAX RATE WILL CHARGED FOR THE MEDICATED SOAP.
THANX & REGARD
23 January 2010
No, vat should be charged on soap 12.5% you have not taken permission that your product is used only for medicine. so vat 12.5% to be charged.
23 January 2010
02 August 2025
Great question! Here's the typical VAT treatment for medicated soap in India:
VAT on Medicated Soap
General Soap VAT Rate: Usually, soaps (non-medicated) attract VAT at the standard rate which is typically around 12.5% (varies by state).
Medicinal/Medicated Soap:
Since medicated soaps fall under the category of medicinal or pharmaceutical products, many states apply a concessional VAT rate, often 4% or sometimes even exempt (depending on the state).
Key Point:
To qualify for the reduced VAT rate (4%), the medicated soap must be approved under the Drug and Cosmetics Act (which you mentioned you have). This approval generally supports the claim that your product is a medicinal product rather than a cosmetic.
State Variation:
VAT rates differ state-wise, so the exact rate depends on where you are selling. For example:
Maharashtra generally taxes medicated soaps at 4%.
Other states may have different rates or exemptions.
What You Should Do:
Check your state VAT schedule: Confirm the VAT rate for medicated soap in your specific state VAT schedule or notification.
Maintain Drug Approval documents: Keep your drug approval handy as proof to claim concessional VAT.
Invoice properly: Clearly mention on your invoice that the product is a medicated soap with Drug Act approval, to justify the lower VAT rate.
Summary:
If your medicated soap is approved under the Drug Act, you can typically charge VAT at 4% instead of the standard 12.5%.
VAT on Medicated Soap
General Soap VAT Rate: Usually, soaps (non-medicated) attract VAT at the standard rate which is typically around 12.5% (varies by state).
Medicinal/Medicated Soap:
Since medicated soaps fall under the category of medicinal or pharmaceutical products, many states apply a concessional VAT rate, often 4% or sometimes even exempt (depending on the state).
Key Point:
To qualify for the reduced VAT rate (4%), the medicated soap must be approved under the Drug and Cosmetics Act (which you mentioned you have). This approval generally supports the claim that your product is a medicinal product rather than a cosmetic.
State Variation:
VAT rates differ state-wise, so the exact rate depends on where you are selling. For example:
Maharashtra generally taxes medicated soaps at 4%.
Other states may have different rates or exemptions.
What You Should Do:
Check your state VAT schedule: Confirm the VAT rate for medicated soap in your specific state VAT schedule or notification.
Maintain Drug Approval documents: Keep your drug approval handy as proof to claim concessional VAT.
Invoice properly: Clearly mention on your invoice that the product is a medicated soap with Drug Act approval, to justify the lower VAT rate.
Summary:
If your medicated soap is approved under the Drug Act, you can typically charge VAT at 4% instead of the standard 12.5%.
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