Mumbai, Sept 4: In a historic move, the Union government has slashed the Goods and Services Tax (GST) rates for 33 cancer drugs and rare medicines — from 12 to zero per cent.
The decision taken by the GST Council, chaired by Finance Minister Nirmala Sitharaman, on Wednesday, rationalised the indirect tax structure, cutting the current four slabs down to two — scrapping the 12 per cent and 28 per cent rates, while retaining the 5 per cent and 18 per cent slabs.
“GST on 33 life-saving drugs and medicines has come down from 12 per cent to zero,” Finance Minister Sitharaman said.
The Union government also slashed GST rates for other life-saving drugs.
As per the revision, life-saving drugs, health-related products, and some medical devices will see a rate cut from 12 per cent/18 per cent to 5 per cent or nil.
“From 5 to 0 and 3 life-saving drugs and medicines used for the treatment of cancer, rare diseases and other severe chronic diseases,” the Finance Minister added.
“There are several drugs and medicines coming down to 5 per cent from 12 per cent. Similarly, spectacles and goggles for correcting vision are also coming down to 5 per cent from 28 per cent,” she said.
The changes in GST rates on services will be implemented from September 22.
The GST revision will also slash rates for health insurance, medical oxygen, and diagnostic kits.
GST on individual health and life insurance premiums have been reduced to nil (which currently stands at 18 per cent).
The Finance Minister said the move will make insurance more affordable for the common man and help expand coverage across the country.
The GST rates have been slashed from 18 per cent to 5 per cent on various medical apparatus and devices used for medical, surgical, dental or veterinary usage or for physical or chemical analysis
The GST rates have been reduced from 12 per cent to 5 per cent on various medical equipment and supplies devices such as wadding gauze, bandages, diagnostic kits and reagents, blood glucose monitoring system (Glucometer) medical devices, etc.
Meanwhile, products harmful to health such as pan masala, gutkha, cigarettes, chewing tobacco, zarda, unmanufactured tobacco, and bidi will continue under existing high GST rates and compensation cess until outstanding cess-linked loans are cleared.
All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured to go from 28 per cent to 40 per cent.
In a significant development for policyholders, GST on individual health and life insurance premiums, which currently stands at 18 per cent, has been reduced to nil in the 56th GST Council meeting, and will come into effect starting September 22.
Finance Minister Nirmala Sitharaman said the move will make insurance more affordable for the common man and help expand coverage across the country.
Moving forward, all individual ULIP plans, family floater plans, and term plans will be exempt from GST.
Currently, insurance services attract 18 per cent GST.
With this change, all individual life insurance policies — including term life, Unit Linked Insurance Plan (ULIPs) and endowment plans — as well as their reinsurance, will now fall under the nil GST category.
The exemption also extends to all individual health insurance policies, including family floater and senior citizen plans, along with their reinsurance.
For example, if a policyholder pays Rs 100 as a premium towards buying an insurance policy, he or she actually ends up making a payment of Rs 118 (Rs 100+ Rs 18 GST).
With the exemption, customers will now pay only the base premium quoted by insurers, with no additional GST. Industry experts say this could cut the effective cost of policies by around 15 per cent, making them more accessible and boosting insurance penetration in the country.