GST Cuts on Insurance, Medicines, & Devices Win Industry Support: Experts See Boost to Affordable Healthcare

Story ByNikita Saha

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Finance Minister Nirmala Sitharaman announced at the 56th Council meeting on September 3, 2025, describing the move as a step towards lowering healthcare costs and encouraging greater insurance penetration.

The healthcare industry in India received a significant boost when the Goods and Services Tax (GST) Council announced sweeping tax cuts aimed at improving access and affordability in the sector. From September 22, 2025, all individual life and health insurance premiums will be exempt from GST, reducing the tax rate from 18% to zero. At the same time, the government has cut GST on medicines and medical devices to 5%, with 33 life-saving medicines being entirely exempt from tax.

While healthcare services like treatment by hospitals, diagnostic centres, and paramedics were already GST-exempt, these latest revisions mark a broader push towards a health-positive tax regime. Industry experts have welcomed the changes, citing them as progressive reforms that will directly benefit patients while supporting long-term healthcare infrastructure.

Insurance: Affordable Coverage for More Indians

The GST exemption on individual life and health insurance policies is being hailed as a landmark reform that could accelerate insurance adoption and improve financial protection for families.

The industry also welcomed the zero GST on individual health and life insurance policies, calling it a masterstroke. Shobana Kamineni, executive chairperson, Apollo Healthco, said the move made health protection a right, not a privilege. ''Reductions on medicines and supplies bring affordable care to every household,'' she said.

Anand Roy, CEO and managing director, Star Health and Allied Insurance, noted that the “reform will reshape the insurance landscape, accelerating penetration, driving higher renewal rates, building deeper customer loyalty, and a critical catalyst for future growth”.

“This progressive reform will directly benefit patients by lowering treatment costs, improving affordability, and expanding access to essential medical technologies,’’ said Himanshu Baid, managing director, Poly Medicure Ltd.

Suneeta Reddy, Managing Director of Apollo Hospitals Enterprise Limited, added, “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.”

Medicines: Relief for Patients, Equity in Care

Healthcare leaders have expressed optimism that the cut in GST rates on medicines will ease the financial burden of treatment, particularly for those battling life-threatening conditions.

Welcoming the GST exemption on lifesaving and cancer medicines, the Indian Pharmaceutical Alliance said the move would bring direct relief to patients and their families. ''The reduction in GST on a wide range of medicines from 12% to 5% will help ease the overall treatment burden and make essential therapies more affordable. These reforms will improve the accessibility of medicines and ensure wider availability across healthcare settings,’’ Sudarshan Jain, secretary general of the alliance, said.

Sanjiv Navangul, CEO, Bharat Serums and Vaccines, added, “The decision to eliminate GST on advanced therapies, particularly biologics for oncology and rare diseases, would immediately widen access and availability of advanced care into mainstream treatment pathways. ‘Such reforms reinforce India’s broader ambition of building a strong, self-reliant life sciences ecosystem that can deliver cutting-edge therapies at scale and at prices patients can afford,’ he said.”

Prof Dr Raj Nagarkar, Chief of Surgical Oncology & Robotic Services and Managing Director - KIMS Manavata Hospitals, HCG Manavata Cancer Centre and Six Sigma, Nashik, said, “The latest GST revisions announced in the 56th Council meeting are a progressive step in making healthcare more accessible and affordable for patients across India. This will also help in promoting medical tourism to the country. The removal of GST on lifesaving cancer drugs and the reduction of tax to 5 per cent on essential medicines and medical devices will significantly ease the financial burden on families already fighting one of the toughest battles of their lives. Cancer care is not just about advanced treatment but also about ensuring equity and access. By lowering costs on critical drugs, diagnostic kits and surgical devices, the Government has given hope to millions, who often struggle to manage treatment expenses. At HCG Manavata Cancer Centre, we welcome this initiative, which aligns with our mission of providing world-class cancer care that is both advanced and affordable.”

Dr. Shravan Subramanyam, Managing Director, BPL Medical Technologies, said, “The reduction of GST on life-saving drugs, diagnostic kits, and medical equipment from 12% to 5% is a landmark reform. For patients, this translates into lower treatment costs and better access to advanced medical care. For us, it allows greater price competitiveness, helping us pass on the benefit to customers while strengthening our reach across hospitals, clinics, and homecare segments. We see this as a big enabler for growth, as it supports our mission of delivering affordable, world-class, 'Made in India' medical solutions while empowering us to scale up innovation and expand into newer markets.”

Arpit Bhatia, Director, Laborate Pharmaceuticals, highlighted the structural benefits: “The GST Council decision to place all medicines and medical devices under 5 per cent 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.”

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.”

Ameera Shah, President of NATHEALTH, said, “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.”

Industry leaders recognize that reducing GST on medical devices, instruments, and apparatus could expand access to critical healthcare technology, especially in underserved regions.

A Turning Point for Inclusive Healthcare

The GST revisions announced in the 56th Council meeting are being hailed as transformative, with the potential to improve healthcare access across the country. By cutting taxes on life-saving medicines, medical devices, and insurance products, the government is signaling a renewed focus on equity and affordability. Industry experts, while broadly supportive, have emphasized the need for timely implementation and efficient refund mechanisms to ensure that the benefits reach patients without delay.

If executed effectively, these reforms could not only ease treatment costs but also promote preventive healthcare, foster insurance adoption, and strengthen India’s healthcare infrastructure, bringing affordable, world-class care within reach of millions.