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GST Rate Changes in the Pharma and Healthcare Sector – 56th GST Council Meeting

Introduction

The 56th meeting of the GST Council, held on 3rd September 2025 at Sushma Swaraj Bhavan, New Delhi under the chairpersonship of Union Finance Minister Smt. Nirmala Sitharaman, announced a series of significant decisions aimed at rationalizing GST rates in the pharmaceutical and healthcare sector.

This move is a landmark step because healthcare is one of the most sensitive areas impacting every household — from daily medicines to critical treatments for rare diseases. The Council’s recommendations target:

• Reducing treatment costs for patients.
• Providing relief to the common man and middle class.
• Supporting affordable healthcare in India.
• Ensuring that pharmaceutical manufacturers continue to enjoy Input Tax Credit (ITC) to maintain competitiveness.

The changes in GST rates cover life-saving drugs, rare disease medicines, essential medicines, traditional system drugs (Ayurvedic, Unani, Siddha, Homoeopathic, Bio-chemic), surgical consumables, diagnostic kits, and medical devices.

GST Rate Changes – Health Sector

(From 5% → Nil GST)

S. No.	Chapter / Heading / Sub-heading / Tariff Item	Description of Goods
1	30	1. Agalsidase Beta 2. Imiglucerase 3. Eptacog alfa (activated recombinant coagulation factor VIIa)

 

(From 12% → Nil GST)

S. No.	Chapter / Heading	Description of Goods
1	30	Onasemnogene abeparvovec
2	30	Asciminib
3	30	Mepolizumab
4	30	Pegylated Liposomal Irinotecan
5	30	Daratumumab
6	30	Daratumumab subcutaneous
7	30	Teclistamab
8	30	Amivantamab
9	30	Alirocumab, Evolocumab
10	30	Alectinib, Risdiplam
11	30	Obinutuzumab, Polatuzumab vedotin
12	30	Entrectinib, Atezolizumab
13	30	Spesolimab, Velaglucerase Alpha
14	30	Agalsidase Alfa, Rurioctocog Alpha Pegol
15	30	Idursulphatase, Alglucosidase Alfa
16	30	Laronidase, Olipudase Alfa
17	30	Tepotinib, Avelumab
18	30	Emicizumab, Belumosudil
19	30	Miglustat, Velmanase Alfa
20	30	Alirocumab, Evolocumab
21	30	Cystamine Bitartrate
22	30	CI-Inhibitor injection
23	30	Inclisiran

 

(From 12% → 5% GST)

S. No.	Chapter / Heading	Description of Goods
1	28	Anaesthetics
2	28	Potassium Iodate
3	28	Steam
4	2801 20	Iodine
5	2804 40 10	Medical grade oxygen
6	2847	Medicinal grade hydrogen peroxide
7	30	All Drugs and medicines including: (i) Fluticasone Furoate + Umeclidinium + Vilanterol (FF/UMEC/VI) (ii) Brentuximab Vedotin (iii) Ocrelizumab (iv) Pertuzumab (v) Pertuzumab + Trastuzumab (vi) Faricimab
8	3001	Glands and other organs for organo-therapeutic uses, dried, extracts, heparin and salts, other human or animal substances for therapeutic/prophylactic uses
9	3002	Animal blood, antisera, blood fractions, immunological products, toxins, cultures of micro-organisms (excluding yeasts)
10	3003	Medicaments (excluding goods of heading 30.02, 30.05 or 30.06) consisting of two or more constituents mixed for therapeutic/prophylactic uses, not put up in measured doses or retail sale
11	3004	Medicaments for therapeutic/prophylactic uses in measured doses/retail sale, including Ayurvedic, Unani, Siddha, Homoeopathic or Bio-chemic systems medicaments
12	3005	Wadding, gauze, bandages, dressings, adhesive plasters, etc., impregnated/coated with pharmaceutical substances for medical, surgical, dental, or veterinary purposes
13	3006	Pharmaceutical goods (Note 4 to Chapter 30), e.g. sterile surgical catgut, suture materials, haemostatics, tissue adhesives, sterile laminaria, adhesion barriers, waste pharmaceuticals [excl. contraceptives & ostomy appliances]
14	3822	All diagnostic kits and reagents
15	4015	Surgical rubber gloves / medical examination rubber gloves
16	90 or other Chapter	Blood glucose monitoring system (Glucometer) & test strips
17	90 or other Chapter	Patent Ductus Arteriosus / Atrial Septal Defect occlusion device
18	9004	Spectacles and goggles for correcting vision
19	9018	Instruments & appliances for medical, surgical, dental, veterinary uses incl. scintigraphic & electro-medical apparatus, sight-testing instruments
20	9019	Mechano-therapy appliances, massage apparatus, aptitude-testing apparatus, ozone/oxygen/aerosol/artificial respiration therapy apparatus
21	9020	Other breathing appliances & gas masks (excluding protective masks without mechanical parts or filters)
22	9022	X-ray, radiography, radiotherapy apparatus, X-ray tubes, generators, control panels, treatment/exam tables, chairs, lights
23	9804	Other drugs & medicines intended for personal use

 

(From 18% → 5% GST)

S. No.	Chapter / Heading	Description of Goods
1	9025	Thermometers for medical, surgical, dental or veterinary usage
2	9027	Instruments and apparatus for medical, surgical, dental or veterinary uses for physical or chemical analysis

 

Why All Medicines Are Not Exempted – GST Council Clarification

The GST Council issued FAQs to clarify the reasoning:

1.    All medicines are at 5% GST unless specifically Nil-rated.

2.    Full exemption is avoided because then manufacturers lose ITC on inputs, raising costs and possibly making medicines more expensive.

3.    Medical devices are at 5% GST (unless Nil-rated).

4.    While this deepens inverted duty structure (inputs taxed higher than outputs), GST law allows refund of accumulated ITC, and the Council has recommended faster refund processing to ease industry concerns.

Broader Impact of GST Rate Cuts

(i) For Patients

• Direct savings on life-saving drugs and essential medicines.
• Lower hospital bills as bandages, oxygen, gauze, gloves, and diagnostic kits get cheaper.
• Reduced cost of lab testing and medical monitoring.

(ii) For Healthcare Providers

• Hospitals and clinics benefit from lower input costs on consumables, diagnostic reagents, and equipment.
• Traditional medicine practitioners (Ayurveda, Unani, Siddha, Homoeopathy) gain from lower taxes, making treatments more affordable.

(iii) For Manufacturers

• ITC benefit retained at 5% rate ensures cost neutrality.
• Refunds under inverted duty structure will prevent cash flow issues.
• Broader demand may increase as affordability improves.

(iv) For Economy & Government

• Reduction in tax revenue compensated by better healthcare access and wider compliance.
• Strong alignment with government’s Ayushman Bharat and universal healthcare goals.

Conclusion

The 56th GST Council Meeting has brought sweeping changes to GST rates in the pharma and healthcare sector. By exempting rare and life-saving drugs, reducing GST on essential medicines and medical devices, and supporting both modern and traditional medicine systems, the Council has struck a fine balance between affordability for patients and sustainability for manufacturers.

This reform is expected to:

• Make healthcare more affordable for all sections of society.
• Encourage greater accessibility of medicines and devices.
• Support the vision of a healthier India under GST.

It is, therefore, rightly seen as a pro-patient, pro-poor, and pro-middle-class measure, setting the stage for better healthcare delivery in the country.

Disclaimer: All the Information is based on the notification, circular advisory and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.

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