The Goods and Services Tax (GST) reforms approved by the GST Council are set to make vital medicines and healthcare services more affordable for everyone. During their 56th meeting held on Wednesday, the council introduced major changes aimed at easing the financial burden on consumers and strengthening public health.
One of the biggest announcements is the simplification of GST slabs. The council has reduced the four existing GST rates to just two: 5 percent and 18 percent, by removing the 12 percent and 28 percent slabs. This means that many life-saving medicines, health products, and some medical devices will now be taxed at 5 percent or even be GST-free. The aim is to cut down costs for essential healthcare items, making them more accessible to all.
These new GST rates on healthcare services will come into effect from September 22. Experts say this move is a timely boost for the Indian healthcare sector. Sudarshan Jain, Secretary General of the Indian Pharmaceutical Alliance (IPA), highlighted that putting medicines in the 5 percent GST slab will improve affordability and help address public health challenges. He also mentioned that the industry has proposed lowering GST on key inputs like Active Pharmaceutical Ingredients (API) and Key Starting Materials (KSM) to 5 percent. This step could prevent tax inversion, improve cash flow, support local manufacturing, and strengthen India’s reputation as the “pharmacy of the world.”
The Association of Indian Medical Device Industry (AiMeD) also welcomed the GST cut from 12 percent to 5 percent for medical devices and related products. Rajiv Nath, AiMeD Forum Co-Ordinator, said timely refunds of GST on inverted tax structures would help the industry stay competitive. He also suggested a transition period for switching to new packaging materials to avoid profiteering and promised that businesses would pass the benefits of lower GST to consumers through reduced prices.
In another big change, the government has decided to eliminate GST on individual health and life insurance premiums, which previously had an 18 percent tax. This move aims to make health and life insurance more affordable for the average person and encourage more families to buy coverage. Now, all individual insurance policies—including term plans, ULIPs, endowment plans, and senior citizen policies—will be GST-free, helping more people secure their health and financial future.
Overall, these reforms are seen as a big step forward for India’s healthcare system, making essential medicines and insurance more accessible and affordable for millions of people across the country.
