The 56th GST Council Meeting introduced key reforms about GST for medicines, which is now reshaping India's pharmaceutical sector. Most notably, 37 life-saving medicines used for treating cancer, rare diseases and chronic conditions have been made completely exempt from GST. Additionally, several commonly used medicines have seen a reduction in GST rates from 12% to 5% or nil.
These changes aim to make essential drugs more affordable for patients while simplifying tax compliance for manufacturers and retailers, leading to a more efficient and accessible healthcare ecosystem. Here is how it is reshaping the pharmaceutical industry.
What is the New GST on Medicines?
Listed below are all the GST brackets on medical products.
Zero GST on Medicines and Medical Products
|
Product / Type |
Medicine GST Rate |
Notes / What's Covered |
| Life-saving drugs (cancer, rare diseases, chronic conditions) |
0% (Fully Exempt) | Drugs like Onasemnogene abeparvovec, Mepolizumab, Daratumumab, and others. |
| Human blood, its components |
0% (Fully Exempt) | Blood and its fractions are exempt to ensure access and affordability. |
| Contraceptives, sanitised menstrual products |
0% (Fully Exempt) | Products like condoms, intrauterine devices, sanitary napkins, etc.. |
5% GST on Pharma Products - Standard Rate for Essentials
|
Product / Type |
GST Rate |
Notes / What's Covered |
| Most medicines and drugs |
5% | Includes most allopathic, ayurvedic, unani, homoeopathic medicines (unless exempt). |
| Medical devices and equipment |
5% | Glucometers, nebulisers, wheelchairs, hospital beds, etc. |
| Diagnostic kits and reagents |
5% | COVID-19 test kits, pregnancy tests, glucose test strips, etc. |
| Medical-grade oxygen and life-saving supplies |
5% | Oxygen cylinders, insulin, oral rehydration salts, vaccines, etc. |
| Surgical consumables |
5% | Bandages, gauze, cotton, sutures, surgical gloves, etc. |
12% and 18% GST - Select Formulations & Medical Equipment
|
Product / Type |
GST Rate |
What's Covered |
| Bulk drugs and intermediates |
12% | Raw materials used in non-essential drug manufacturing. |
| APIs (Active Pharmaceutical Ingredients) |
12% | Select active ingredients used in formulations. |
| High-end or specialised medical equipment |
12% | Devices not for routine care (e.g., implants, MRI machinery). |
| Nutraceuticals and food supplements |
18% | Protein powders, multivitamin supplements, tonics not classified as medicine. |
| Cosmetic and wellness-related medicines |
18% | Hair regrowth products, skin creams, slimming treatments, etc. |
Note: Note that the
GST Council standardises these GST rates and may change over time.
Impact of New GST Rates on Pharma Products in Reshaping the Industry
Reduction in Cost of Diagnostic Tests
With GST on lab equipment and test kits now reduced to 5%, the cost of medical tests has gone down. This helps hospitals, labs and most importantly, patients, who now pay less for essential diagnostics.
Lower GST on Pharma Services
Tasks like tablet coating, packaging, and contract manufacturing now have a lower medicine GST percentage of 5%. This cuts down overall production costs and makes medicines more affordable.
More Investment in R&D
Pharma companies are saving money on taxes and using it to invest more in research and development. This can lead to better, more advanced medicines in the future.
Increased ITC
The new GST structure has made it easier for companies to claim Input Tax Credit (ITC), improving cash flow and helping them manage costs better.
What Does This Mean for You?
The new GST changes don't just help pharma companies; they directly benefit you as a patient or caregiver.
-
Lower medicine prices: With many essential drugs now either tax-free or taxed at just 5%, the cost of regular treatments, chronic illness medication, and even some cancer drugs has gone down.
-
Affordable medical tests: Diagnostic services like blood tests and scans are expected to cost less since test kits and equipment now have a lower GST rate.
-
More innovation in medicines: With pharma companies saving on tax, they can now invest more in research, which means better, more effective treatments may become available sooner.
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Less burden during hospitalisation: Lower GST on medical devices and services may reduce your out-of-pocket expenses during hospital stays or surgeries.
How Does Reliance Health Insurance Help Reduce Expenses Even Further?
Reliance General Insurance offers health plans that go beyond just basic coverage. Our plans ensure comprehensive coverage with unique add-ons that help you save further on medical expenses, so you pay less overall, even when medical costs rise. Additionally, with
zero GST on health insurance premiums effective from
September 22, 2025, the cost you see is what you pay, without any extra tax.
So, lower health insurance and medical services costs mean a better chance of investing in a comprehensive plan, such as our Reliance
Health Infinity plan, which includes
OPD coverage, diagnostic tests, medication costs, along hospital bills. In addition, you can choose from many add-ons like Consumables Cover, OPD Services add-on, unlimited Restore, Room Rent Limit Reduction,
Maternity Cover, etc, to tailor benefits to your needs.
We also offer a wide network of 10,000+ hospitals nationwide, ensuring quick and efficient claim processing. So, choose a plan that best fits you and protects your health and finances, with Reliance
Health Insurance as your health companion.
Frequently Asked Questions
Which medicine has an 18% GST rate?
Most medicines no longer fall under the 18% GST slab after the recent GST reforms in 2025. However, some specialised medical equipment, cosmetic or non-essential drugs and nutraceuticals still attract 18% GST.
How to calculate GST on medicine MRP?
GST is usually included in the Maximum Retail Price (MRP) of a medicine. For example, if a tablet's MRP is ₹105 and it includes 5% GST, then the base price is ₹100, and ₹5 is GST.
What are the new GST rates vs the old rate?
Earlier, many essential medicines and medical kits were taxed at 12% or even 18%. After the GST revision (56th GST Council Meeting, Sept 2025), most have moved to 5% or 0%.
Let's assume an insulin pen was priced at ₹1,120 with 12% GST.
This means the base price = ₹1,000.
Total MRP = Base price (₹1,000) + GST (₹120)
Total MRP with new GST (5%): Base price (₹1,000) + GST (₹50)
You now save ₹70, making treatment more affordable.