Industry responds to GST cuts on healthcare and medicines

The GST Council on Wednesday approved changes to the indirect tax system, replacing the current four-tier structure of 5, 12, 18, and 28 per cent with a two-rate framework of 5 and 18 per cent, and introducing a special 40 per cent slab for select items.

The announcement follows Prime Minister Narendra Modi’s statement on 15 August 2025 from the ramparts of Red Fort, where he referred to the next-generation GST reforms as a strategic, principled, and citizen-centric evolution of a landmark tax framework aimed at enhancing the quality of life for all citizens.

The Council said the reforms would have a multi-sectoral and multi-thematic focus on improving the lives of all citizens and ensuring ease of doing business for all, including small traders and businessmen.

As part of the changes, GST has been reduced from 12 per cent to nil on 33 lifesaving drugs and medicines, and from 5 per cent to nil on 3 lifesaving drugs and medicines used for treatment of cancer, rare diseases, and other severe chronic diseases. The GST on all other drugs and medicines has been reduced from 12 per cent to 5 per cent.

The GST on various medical apparatus and devices used for medical, surgical, dental, or veterinary usage, or for physical or chemical analysis, has been reduced from 18 per cent to 5 per cent. A similar reduction from 12 per cent to 5 per cent has been applied on medical equipment and supplies such as wadding gauze, bandages, diagnostic kits and reagents, and blood glucose monitoring systems (glucometers).

Industry stakeholders have begun responding to the GST changes, sharing their views on the implications for healthcare and business.

 Rajiv Nath , Forum Coordinator, AiMeD:

“We welcome the decision to reduce GST from 12 per cent to 5 per cent if refund on accumulated GST due to the inverted GST structure will be made within 7 days as being informed, we hope GST refunds also available on GST paid on Services & Capital Goods as is the case in other countries like Australia, Singapore & Canada etc to enable us to be globally competitive . We also hope a transition period is provided to switch packaging material to avoid persecution for profiteering though we intend to pass on the GST reduction to the end consumers by reducing MRP proportionately.”

Ashwin Sapra, Partner (head – pharma & healthcare), Cyril Amarchand Mangaldas: 

“Reduction of GST from 12 per cent to NIL on 33 lifesaving drugs and medicines and from 5 per cent to NIL on 3 lifesaving drugs & medicines used for treatment of cancer, rare diseases and other severe chronic diseases. Reduction of GST on all other drugs and medicines from 12 per cent to 5 per cent. The reduction of GST on items such as glucometers, thermometers, corrective spectacles, diagnostic kits and reagents is a welcome measure that will go a long way in reducing healthcare costs especially on such items of daily use for many.

Adding to this, the complete removal of GST on individual health insurance will have a positive effect in making health insurance more affordable as healthcare costs see an upward trend.  A step in the right direction.”

Ameera Shah, President, NATHEALTH and Executive Chairperson, Metropolis Healthcare:

“NATHEALTH welcomes the Government’s decision to reduce GST on diagnostic kits, reagents and a wide range of medical technology items from 12 per cent to 5 per cent. This reform is in line with NATHEALTH’s long-standing recommendations for a more enabling indirect tax framework in the healthcare sector, one that acknowledges the critical role of preventive health and supporting medical technology in strengthening healthcare delivery.

By easing costs and improving affordability, the measure will enhance access to quality healthcare services, support early disease detection, and bring greater consistency by standardising GST rates across preventive, curative and rehabilitative care.

We also welcome the reduction of GST slabs on retail health products such as health insurance, glucometers and corrective spectacles, which will make essential healthcare services and products more affordable for citizens. These progressive measures will go a long way in advancing the vision of a Swasth Bharat underpinning a Samriddh Bharat.”

Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance:

“The Indian Pharmaceutical Alliance welcomes the Government’s decision to exempt life-saving and cancer medicines from GST, a step that will bring direct relief to patients and their families. Equally, the reduction in GST on a wide range of medicines from 12 per cent to 5 per cent will help ease the overall treatment burden and make essential therapies more affordable.

These reforms will improve the accessibility of medicines, ensure wider availability across healthcare settings, and contribute positively to the Government’s vision of affordable healthcare for all. The pharmaceutical industry remains committed to working alongside policymakers to further enhance patient access and advance India’s healthcare outcomes.”

Himanshu Baid, Managing Director, Poly Medicure:

“We welcome the Government’s landmark decision to reduce GST from 12 per cent to 5 per cent on a wide range of medical products, including diagnostic kits, reagents, surgical apparatus and other critical Medtech products. This progressive reform will directly benefit patients by lowering treatment costs, improving affordability, and expanding access to essential medical technologies. It is a transformative step that will strengthen India’s healthcare system and advance the vision of affordable healthcare for all.”

“We welcome the latest GST reforms as a landmark step in making healthcare more affordable and accessible for millions of Indians. Bringing down tariffs on essential items like glucometers, test strips, thermometers, diagnostic kits, and medical-grade oxygen to 5 per cent is a big relief for customers, especially in a country often called the diabetic capital of the world. This bold move under the Modi government’s relief package will not only ease the burden on patients but also fuel growth and innovation in the healthcare sector. Markets will be on fire now as affordable health truly takes center stage.”