From Cancer Drugs to Glucometers: GST Slashed to 5% Across Healthcare Sector

At present, most devices are taxed at 12 percent, while manufacturing inputs carry 18 percent GST, creating an inverted duty structure for domestic producers.

Patients battling cancer, diabetes, rare diseases, and other chronic conditions are set to benefit from lower treatment costs after the GST Council reduced tax rates on medicines and medical devices.

Union Finance Minister Nirmala Sitharaman announced that 33 life-saving drugs, including those for cancer and rare illnesses, will now be exempt from GST, while three other critical medicines previously taxed at 5 per cent are also tax-free.

For routine medications, GST has been cut from 12 percent to 5 percent. Essential medical devices and supplies, including diagnostic kits, surgical tools, bandages, dental equipment, glucometers, and oxygen devices, will also attract just 5 percent GST, down from 12–18 percent. These new rates will take effect from 22 September 2025. Commenting on the development, Suneeta Reddy, Managing Director of Apollo Hospitals Enterprise Limited, said, "We welcome the rationalization of GST, which comes as a corollary to the tax cuts and 100% FDI in insurance announced in the Union Budget earlier this year. Together, this provides a valuable platform to make healthcare more accessible and affordable. The reduction in GST rates of life-saving and other drugs, and the standardization of GST for consumables are very positive steps both for the patient and for the sector. India’s aspiration for more health infrastructure will be well-served with the reduction in GST for construction inputs like cement, fly ash bricks, marble and granite. Above all, we believe this will enable many more Indians to purchase health insurance, and insurers will serve a larger insured pool. This will truly unlock access to high-quality healthcare for India."

Uniform GST Slab for Medical Devices

The GST Council’s rationalization categorizes all medical devices under a single 5 percent slab. Sitharaman emphasized that this applies to devices used for medical, surgical, dental, or veterinary purposes.

Currently, most devices are taxed at 12 percent, while manufacturing inputs carry an 18 percent GST, creating an inverted duty structure for domestic producers.

Rajiv Nath, Forum Coordinator of AiMeD, welcomed the move but urged timely implementation, saying, “We welcome the decision to reduce GST from 12 to 5 percent if a refund on accumulated GST due to the inverted structure will be made within 7 days, as being informed.”

Arpit Bhatia, Director of Laborate Pharmaceuticals, noted the broader impact on healthcare access, saying, “The GST Council decision to place all medicines and medical devices under 5 percent and to exempt 36 life-saving drugs with effect from 22 September 2025 is a structural positive for the sector. A simpler two-slab regime reduces classification disputes and improves pricing clarity across the supply chain. Provided refunds of accumulated input tax credit are processed quickly where the duty structure is inverted, the reform should ease working capital and support wider access in semi-urban and rural markets.”

Ameera Shah, President of NATHEALTH, also welcomed the reduction, saying, “The Government’s decision to reduce GST on diagnostic kits, reagents, and a wide range of medical technology items from 12 to 5 percent is in line with NATHEALTH’s long-standing recommendations for a more enabling indirect tax framework in the healthcare sector.”

She added, “The reduction of GST slabs on retail health products such as health insurance, glucometers, and corrective spectacles, will make essential healthcare services and products more affordable.”

The move follows prior industry requests for a 12 percent slab to address inverted duty concerns and maintain competitiveness against lower-taxed imports.

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