.png){kind=logo}
In a significant relief for patients battling cancer, rare diseases, and various chronic conditions, the Goods and Services Tax (GST) Council has announced major tax cuts on vital medicines and health services. Government’s new GST Reform aims to simplify taxation and reduce consumer burden.
The decision was made during the 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman on September 3, 2025, and will take effect on September 22 within the new GST 2.0 structure.
The Council has completely waived GST on 33 essential medicines that were previously taxed at a rate of 12%. Additionally, three critical drugs used for cancer and rare disease treatment have been moved from the 5% slab to zero percent.
Exempting GST on Cancer Drugs provides much-needed relief to patients and families. This move is expected to substantially lower the cost of treatment for thousands of patients and their families.
Onasemnogene abeparvovec, Asciminib, Mepolizumab, Pegylated Liposomal Irinotecan, Daratumumab, Teclistamab, Amivantamab, Alectinib, Polatuzumab vedotin, and Risdiplam are examples of drugs that will benefit from new reforms.
The proposed GST 2.0 Healthcare Reforms are expected to make treatments more affordable. Beyond these, all other medicines will now attract only 5% GST instead of 12%, further reducing healthcare expenses.
The reforms extend beyond medicines. Individual medical and life insurance policies, including family floaters and senior citizen policies, will now be exempt from GST. Previously, these attracted an 18% tax, which inflated premium costs. Medical equipment and diagnostic supplies have also seen relief.
Policy changes could lead to Cheaper Medicines in India, benefiting millions of people. Products such as bandages, gauze, diagnostic kits, reagents, and glucometers will now fall under the 5% slab, down from 12%. Even corrective eyewear, such as spectacles and goggles, has seen a significant tax cut from 28% to 5%.
According to Finance Minister Sitharaman, “The reduction of GST on essential medicines and health services is intended to directly ease the financial burden on patients while expanding access to affordable healthcare.”
Also Read: GST Rate Overhaul: What Gets Cheaper and Costlier from September 22
Healthcare professionals have hailed the reforms as a significant milestone in public health. Dr. Sunny Jain, Senior Consultant at Accord Super Speciality Hospital, called it “a revolution in public health policy,” noting that the cuts “make cancer therapies and rare disease treatments far more accessible, reducing the crushing burden on patients and families.”
Adjustments in GST on Health Insurance may influence premium costs and coverage plans. Industry leaders echoed this sentiment. Jeevan Kasara, CEO of Steris Healthcare, emphasized that lowering GST “breaks down barriers to treatment and strengthens the healthcare delivery system.”
While essential healthcare continues to thrive, tobacco products, pan masala, gutkha, and aerated beverages remain heavily taxed. These products will continue to have high rates under the steep GST, along with a compensation cess. Sweetened beverages will move to a 40% slab to discourage the consumption of unhealthy drinks.
GST 2.0 aims to reduce taxes on lifesaving drugs and health insurance, while maintaining high taxes on luxury and harmful goods. This will make healthcare more affordable and accessible. Analysts expect that this reform will help improve access to treatment, bringing India closer to its goal of universal healthcare.
