Are GST reforms in the health sector a bold step?

New Delhi, Sep 4 (NationPress) The recent cuts in the Goods and Services Tax (GST) within the healthcare sector represent a significant advancement toward achieving a Swasth Bharat that supports a Samriddh Bharat, according to industry experts who praised the initiative on Thursday.

In a groundbreaking decision, the GST Council, led by Finance Minister Nirmala Sitharaman, streamlined the indirect tax framework on Wednesday, reducing the number of slabs from four to two. This reform eliminates the 12% and 28% rates while maintaining the 5% and 18% categories.

Under the new guidelines, essential medications, health-related products, and various medical devices will experience a tax reduction from 12% or 18% to either 5% or zero.

Importantly, the GST rates for 33 cancer medications and rare treatments have been slashed from 12% to zero.

The adjustments to GST rates concerning services will take effect from September 22.

“This change will reduce costs and enhance affordability, thereby increasing access to quality healthcare, facilitating early disease detection, and creating uniformity through standardized GST rates across preventive, curative, and rehabilitative care,” stated Ameera Shah, President of NATHEALTH.

“We applaud the government for the far-reaching GST reforms in healthcare. The reduction in GST for lifesaving drugs—bringing 33 essential medications from 12% to zero and three critical treatments for cancer, rare illnesses, and other serious chronic conditions from 5% to zero—is not only historic but also compassionate. This bold initiative will greatly alleviate the financial burden on patients and families,” remarked Anil Matai, Director General of the Organisation of Pharmaceutical Producers of India (OPPI).

The GST rates for eyewear, including spectacles and goggles, have also been lowered to 5% from 28%. Additionally, the revisions will decrease GST rates for health insurance, medical oxygen, and diagnostic devices such as glucometers.

The GST on individual health and life insurance premiums has been cut to zero, down from the current 18%.

“These progressive reforms will significantly contribute to the vision of a Swasth Bharat leading to a Samriddh Bharat,” Shah emphasized.

Matai noted, “This change will make healthcare more affordable and accessible at all levels—from hospitals to households—and will bolster India's pursuit of universal health coverage. The decrease in GST will be transferred to patients, thereby lowering treatment costs and enhancing access while generating greater demand for quality healthcare.”

Dr. Harsh Mahajan, Chairman of the FICCI Health Services Committee, welcomed the “emphasis on healthcare in the GST rate reform by the GST Council and the reduction of GST from the existing 12% and 18% to 5% on medical devices, diagnostic kits, and reagents.”

“We are also optimistic that GST on equipment maintenance service contracts will be reduced from 18% to 5%,” he added.

Experts observed that these GST reforms will deliver the much-needed boost to the life sciences and healthcare sectors, as well as promote medical tourism within the country.

“The lower costs will render medical procedures more affordable and enhance medical tourism. The exemption from GST on health insurance will alleviate financial pressures on our healthcare system, improve patient access, and further establish India's position as a global hub for life sciences,” said Monika Arora, Partner at Deloitte India.

“The reduction in GST rates has far-reaching consequences for India's healthcare landscape. The decision to lower GST on individual health and life insurance premiums from 18% to zero is expected to make coverage more accessible, encourage enrollment among individuals—including the 'missing middle'—and reduce out-of-pocket costs,” added Bhanu Prakash Kalmath SJ, Partner and Healthcare Industry Leader at Grant Thornton Bharat.