Government Reduces GST on Life-Saving Medicines to Zero

Significant GST Cuts for Essential Medicines

New Delhi, Sept 4: In a significant move to support patients facing cancer and rare diseases, the Union government has announced a reduction of Goods and Services Tax (GST) on 33 essential medicines from 12% to zero, among other items, on Wednesday.

This decision was made during a GST Council meeting led by Finance Minister Nirmala Sitharaman, which also endorsed a comprehensive overhaul of the indirect tax system.

The previous four GST slabs have been streamlined to just two, eliminating the 12% and 28% categories, while maintaining the 5% and 18% brackets.

Sitharaman stated, “The GST on 33 life-saving drugs has been reduced to zero,” and mentioned that additional medicines and health-related products will also experience lower rates.

Under the new structure, various drugs and devices used for treating cancer, rare diseases, and chronic conditions will see their GST rates drop from 12% or 18% to either 5% or nil.

She added, “Numerous drugs are being reduced to 5% from 12%. Additionally, spectacles and goggles for vision correction will also see a decrease to 5% from 28%.”

These GST rate adjustments for services will take effect on September 22. Health and life insurance premiums, which are currently taxed at 18%, will now be exempt from GST.

The Finance Minister emphasized that this initiative will enhance the affordability of insurance for the general public and broaden coverage nationwide.

Medical oxygen, diagnostic kits, and various medical and surgical equipment will also benefit from substantial rate reductions, with many items dropping from 18% to 5%.

Conversely, products considered harmful to health, such as pan masala, cigarettes, chewing tobacco, and bidi, will remain subject to high GST rates and compensation cess until outstanding loans linked to the cess are settled.

Aerated sugary drinks will face an increased GST rate of 40%, up from the existing 28%.