Union Finance Minister Nirmala Sitharam, in the 56th meeting of GST Council, announced to reduced the GST rate from 12 per cent to zero on 33 life-saving drugs and medicines, and from 5 per cent to nil on three life-saving drugs used for the treatment of cancer, rare diseases, and other severe chronic conditions.
GST on all other drugs and medicines has been reduced from 12 per cent to 5 per cent. The GST on various medical apparatus and devices used for medical, surgical, dental, or veterinary purposes, or for physical and chemical analysis, has also been reduced from 18 per cent to 5 per cent.
The Indian Pharmaceutical Alliance welcomes the government’s decision to exempt life-saving and cancer medicines from GST, a step that will bring direct relief to patients and their families. Sudarshan Jain, Secretary General, Indian Pharmaceutical Alliance said, “The reduction in GST on a wide range of medicines from 12% to 5% will help ease the overall treatment burden and make essential therapies more affordable.”
He further added, “These reforms will improve the accessibility of medicines, ensure wider availability across healthcare settings, and contribute positively to the government’s vision of affordable healthcare for all. The pharmaceutical industry remains committed to working alongside policymakers to further enhance patient access and advance India’s healthcare outcomes.”
Commenting on the announcement, Farheen Butt, Partner, Deloitte India said, “Exempting lifesaving drugs, especially those used for cancer and rare chronic diseases, is expected to substantially ease the financial burden on patients who often face high medical costs. In addition to patient relief, the GST Council’s recommendation to grant 90% provisional refunds for claims arising from the inverted duty structure should help pharmaceutical companies mitigate working capital challenges caused by delays in refund processing.”
“Admist the positive changes, one concern area that arises is the enhanced working capital pressure caused by duty inversion on account of the higher rate of 18% on APIs as against the reduced rate of Nil or 5% on finished formulations. This concern, however, is effectively addressed by the recommendation to allow 90% provisional refunds on claims arising from such inverted duty structure, highlighted Monika Arora, Partner, Deloitte India
The GST on Agalsidase Beta, Imigluicerase, and Eptacog alfa which are used to treat genetic and blood disorder are fully tax-exempted from the existing 5%, while 33 other drugs that are fully tax-exempted most are used to treat cancer.
Suresh Nair, Tax Partner, EY India also commented that the the GST Council’s tax rate restructuring in the pharma sector is transformative for accessible healthcare. He added, “By lowering GST on all medicines from 12% to 5% and granting nil rates to 36 vital lifesaving drugs for conditions like cancer and rare diseases, it would significantly reduce patient expenses and improve access to essential therapies. Reducing GST on medical equipment from 18% or 12% to 5% further enhances affordability of essential healthcare for patients. GST on job work services for the pharma sector has also been reduced from 12% to 5%. This citizen-focused reform promotes equitable healthcare, strengthens public health and industry growth, and reinforces India’s global pharmaceutical leadership.”
“The reduction of GST on items such as glucometers, thermometers, corrective spectacles, diagnostic kits and reagents is a welcome measure that will go a long way in reducing healthcare costs especially on such items of daily use for many,” said Ashwin Sapra, Partner (head – pharma & healthcare), Cyril Amarchand Mangaldas.
Jitin Makkar, Senior Vice President and Group Head, Corporate Sector Ratings, ICRA Limited said, “The GST rate cut on select lifesaving medicines, general medicines, and some medical supplies and equipment, besides the NIL rate for health insurance premia is poised to enhance affordability and accessibility for patients. As health insurance penetration further improves, it will in turn benefit the hospitals sector, which has already been witnessing increasing demand on the back of higher insurance penetration over the past few years. In the long run, this step aligns with the government’s vision of making healthcare more inclusive and affordable.”
Bhavin Mehta, whole time Director kilitch Drugs and Vice-Chairman, Pharmexcil said, “The GST cut — from 12% to 5% on medicines and devices, and nil GST on 33 lifesaving drugs — is likely to encourage wider access and affordability. Over time, this can translate into higher demand, particularly for chronic and high-value therapies where even small reductions in cost influence treatment adherence. While companies may see some adjustment in input credits, the net outcome should be positive as affordability drives greater consumption and compliance. For patients and families, this move brings direct financial relief. Lifesaving and critical medicines that earlier attracted 5–12% GST will now be cheaper, reducing out-of-pocket expenditure on treatments for cancer, rare diseases, and other chronic conditions. Even a modest reduction of 5–7% in therapy costs can make a meaningful difference in household budgets, improving access to timely and sustained care. – Mr. Bhavin Mukund, Whole Time Director Kilitch Drugs and VIce Chairman Pharmexcil.
Companies comment on the restructured GST Council’s tax rate:
Sheetal Arora, Promoter & CEO, Mankind Pharma Ltd said, “The GST revisions go beyond tax rationalization, they represent a structural shift in how India is enabling healthcare access. By removing GST on lifesaving rare-disease and oncology therapies and reducing it on essential medicines and diagnostics, the government has signaled that affordability and innovation can go hand in hand.
Equally important is the reduction in GST on pharma manufacturing services, which will improve cost efficiencies, strengthen supply chains, and encourage deeper collaboration with MSMEs and CDMOs. Coupled with exemptions on health insurance and hospital services, these reforms address the ecosystem end-to-end including patients, providers, and manufacturers. Such policy foresight not only reduces the cost of care today but also lays the foundation for India to emerge as the world’s hub for affordable innovation in life sciences.”
Rajji Mehdwan, Managing Director & CEO – India & Neighbouring Markets, Roche Pharma India commented, “We congratulate the Government of India on this landmark GST reform, which is truly a game-changer for healthcare in the country. By prioritizing the voices of patients, the government has taken a bold step to make innovative, life-saving therapies more affordable and accessible, especially for those battling critical illnesses like cancer and rare diseases. For patients, this isn’t just policy; it’s hope. The exemption of health and life insurance from GST further strengthens the financial safety net, ensuring that patients can focus on their care without additional financial burden. Combined with the recent customs duty rationalization announced in the Union budget 2025-26, these reforms powerfully reflect the government’s steadfast commitment to universal health coverage. As we move closer to the vision of Viksit Bharat, this progressive approach motivates all of us in the life sciences industry to accelerate our efforts in delivering breakthrough innovations and improving healthcare equity in India.”
Sanjiv Navangul, MD & CEO, Bharat Serums and Vaccines said, “We are encouraged by the GST Council’s decision to eliminate GST on advanced therapies, particularly biologics for oncology and rare diseases. It is a decisive step toward improving and advancing healthcare equity in India. Such reforms impact treatment costs for patients and widen access and availability while integrating advanced care into mainstream treatment pathways. Such reforms reinforce India’s broader ambition of building a strong, self-reliant life sciences ecosystem that can deliver cutting-edge therapies at scale and at prices patients can afford.”
Priyanka Chigurupati, Executive Director, Granules India Limited said, “The GST Council’s rationalisation reflects a clear commitment to strengthening India’s healthcare and pharmaceutical value chain. By reducing GST on all medicines, essential inputs, and contract manufacturing services, while exempting advanced therapies from tax, the government has created a framework that balances patient affordability with industry competitiveness. For a vertically integrated manufacturer like Granules, this change improves supply chain efficiencies and opens new opportunities to collaborate with technical and cost effective partners; improves speed of bringing products to the table. The reduction in job-work GST is significant for contract developers to scale faster, which in turn fuels a stronger and more resilient pharma ecosystem.”
Saransh Chaudhary, President, Global Critical Care, Venus Remedies Ltd, and CEO, Venus Medicine Research Centre said, “The recent GST revisions on essential and critical medicines mark an important step toward improving access and easing treatment costs. By cutting taxes on 33 lifesaving drugs to zero, removing GST on select therapies for cancer and rare diseases, and reducing rates from 12 percent to 5 percent on a broader set of medicines, the government has addressed a pressing barrier to affordability, especially in Tier 2 and Tier 3 cities where treatment costs remain a challenge. These changes reflect a clear intent to align fiscal policy with patient needs and public health priorities. What will matter now is ensuring that the benefit of lower taxes translates into tangible access for patients across the healthcare system. We view these reforms as a constructive move toward a more inclusive healthcare ecosystem and remain committed to working alongside policymakers to ensure that affordability leads to real-world impact for patients.”
Ashok Nair, Managing Director, RPG Lifesciences said, “We welcome the GST Council’s progressive decision to reduce taxes on pharmaceutical and healthcare products. As a leading integrated pharmaceutical company, RPG Life Sciences has been committed to enhancing access to quality medicines across therapeutic areas such as nephrology, oncology, immunosuppressants, and chronic disease management. The recent GST rate rationalisation brings much needed relief and benefit for millions of patients by making life-saving drugs more affordable and accessible. Our presence across branded formulations, active pharmaceutical ingredients, and biosimilars in domestic market empowers us to deliver innovative treatment options in over ten therapy areas. This tax relief will further enable us to strengthen our mission to serve the healthcare needs of India and other global markets, while also boosting India’s position as a hub of pharmaceutical innovation and manufacturing excellence. We remain dedicated to developing advanced therapies that improve patient outcomes and to supporting the government’s vision for a healthier nation.”
Arpit Bhatia, Director, Laborate Pharmaceuticals said, “The GST Council decision to place all medicines and medical devices under 5 per cent and to exempt 36 life saving drugs with effect from 22 September 2025 is a structural positive for the sector. A simpler two slab regime reduces classification disputes and improves pricing clarity across the supply chain. Provided refunds of accumulated input tax credit are processed quickly where the duty structure is inverted, the reform should ease working capital and support wider access in semi urban and rural markets.”