The relief measures come with a clear public health focus -- lowering costs for patients and hospitals, encouraging insurance adoption, and supporting better nutrition and fitness. At the same time, the government has kept "sin goods" such as tobacco, pan masala and sugary drinks outside the ambit of tax cuts, signalling its intent to prioritise preventive health.India's healthcare sector has received a much-needed shot in the arm as the government announced a sweeping Goods and Services Tax (GST) rationalisation package, cutting rates on medicines, medical devices, vision care and fitness services while exempting health insurance premiums. The measures, aimed at reducing treatment costs and expanding preventive healthcare, are expected to ease household budgets and make healthcare more affordable for millions.
Announcing the reforms, Prime Minister Narendra Modi said the proposal for broad-based GST rate rationalisation was designed to promote ease of living for citizens and strengthen the economy.
The relief measures come with a clear public health focus -- lowering costs for patients and hospitals, encouraging insurance adoption, and supporting better nutrition and fitness. At the same time, the government has kept "sin goods" such as tobacco, pan masala and sugary drinks outside the ambit of tax cuts, signalling its intent to prioritise preventive health.
Union Health Minister JP Nadda welcomed the move, saying reduced GST on essential products would bring "relief to families and different sectors."
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Finance Minister Nirmala Sitharaman underlined that the reforms have a "multi-sectoral and multi-thematic" focus, addressing both ease of living and ease of doing business.
Key Reliefs for Healthcare
Medicines: Essential drugs will now attract GST of 5% or be exempted, compared to the earlier 12%. This is expected to cut costs for patients managing chronic conditions such as diabetes, hypertension and cancer. Job-work in pharma manufacturing and services for disposal of biomedical waste will also see rates reduced to 5%.
Medical Devices: GST has been slashed from 12% to 5% on products such as medical-grade oxygen, surgical gloves, diagnostic kits, thermometers and glucometers -- helping hospitals and diagnostic centres lower treatment costs, especially in Tier-2 and Tier-3 cities.
Vision Care: Spectacles, lenses and contact lenses will be taxed at 5% instead of 12%, improving affordability for nearly 10 crore Indians estimated to require corrective eyewear.
Insurance Coverage: Individual health insurance policies, including senior citizen and family floater plans, have been fully exempted from GST. Analysts say this will encourage wider adoption of insurance, complementing government schemes like Ayushman Bharat and PM-JAY.
Nutrition & Preventive Health: Ultra-high temperature (UHT) processed milk and paneer remain tax-free, while GST on dry fruits and diabetic foods has been reduced from 12% to 5%. Gyms and fitness centres will now attract just 5% GST instead of 18%, making preventive healthcare more affordable.
Balanced Approach
While offering significant relief on medicines, nutrition and health-related services, the government has resisted pressure to lower taxes on products harmful to public health. No concessions have been offered for tobacco, pan masala or sugary drinks.
The rationalisation package, officials said, aligns with flagship initiatives such as Ayushman Bharat, Poshan Abhiyaan and the Fit India Movement, and represents a step towards the vision of "Affordable Healthcare for All."
Industry experts said the cuts could lower out-of-pocket healthcare spending, expand insurance coverage, and encourage healthier lifestyles. The package, they noted, also strengthens India's positioning as the "Pharmacy of the World" by reducing input costs in the pharma sector.
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