India takes big step to make healthcare more affordable with GST rate cuts
In a major move to boost healthcare in India, the government has reduced Goods and Services Tax (GST) rates on many essential health products and services. Industry experts say this step will make medical treatments, medicines, and health insurance more affordable for millions of Indians.
On Wednesday, the GST Council, led by Finance Minister Nirmala Sitharaman, announced a major revision of the tax structure. The council simplified the GST slabs from four to two, removing the 12% and 28% rates. Now, most healthcare-related products and services will be taxed at either 5% or completely exempt from GST.
This change means many lifesaving medicines, health products, and some medical devices will see their GST rates drop from 12% or 18% down to just 5% or even zero. Notably, 33 cancer medicines will now be GST-free, greatly reducing the cost for patients fighting serious illnesses.
These new GST rates will come into effect from September 22, 2023. Experts say this move will make healthcare services more affordable, improve access to quality care, and support early diagnosis and treatment.
Ameera Shah, President of NATHEALTH, explained, “Lowering costs and making treatments affordable will help more people access medical services. It also creates uniformity across preventive, curative, and rehabilitative care.”
Industry leaders praised the government’s efforts. Anil Matai, Director General of the Organisation of Pharmaceutical Producers of India (OPPI), said, “Reducing GST on essential medicines and treatments will ease financial pressure on families and save lives.”
In addition to medicines, the GST cut includes spectacles and goggles, dropping from a hefty 28% to just 5%. The move also shrinks the GST on health-related services like health insurance, medical oxygen, and diagnostic tools such as glucometers.
Significantly, GST on individual health and life insurance premiums has been cut from 18% to zero, making health coverage much more affordable.
“The government’s steps will pave the way for a healthier India,” said Shah. “These reforms support our vision of a Swasth Bharat (Healthy India) and a prosperous India.”
Matai from OPPI added, “This move will make healthcare services more accessible at every level — from hospitals to homes — and help India progress towards universal health coverage. Reduced GST means lower treatment costs and increased demand for quality healthcare.”
Dr. Harsh Mahajan, Chairman of FICCI’s Health Services Committee, welcomed the move, especially the reduction on medical devices, diagnostic kits, and reagents from 12-18% to 5%. He also expressed hope that GST on maintenance services for medical equipment might be lowered too.
Many experts believe these reforms will give a boost to India’s healthcare and life sciences sectors, including medical tourism. Lower costs will encourage more patients to seek treatments in India, boosting medical tourism and local healthcare industries.
Deloitte India’s Monika Arora emphasized that the tax cuts will help reduce expenses for patients, improve access to healthcare, and strengthen India’s position as a global healthcare hub. Similarly, Grant Thornton Bharat’s Bhanu Prakash Kalmath said, “Lower GST on health insurance will make coverage more affordable, encouraging more people to get insured and reducing out-of-pocket expenses.”
Overall, these GST rate cuts mark a positive change for Indian healthcare, making treatment, medicines, and insurance more affordable for all. They are expected to drive better health outcomes and support India’s goal of building a healthier nation.
