GST on Medicines and Medical Supplies in India

In India, earlier, there were four separate GST rates: 0%, 5%, 12%, and 18% on medicines and medical supplies. But in the 56th GST Council Meeting conducted on 3rd and 4th September 2025, major reforms were rolled out under the GST 2.0 structure.

There were only two GST slabs, i.e, 5% and 18%, after the council decided to lessen the same while making many essential medicines entirely exempted (at a nil rate). Patients, along with the middle class, must not encounter a burden as per the reform. The healthcare and life-saving drugs should be cost-effective, as ensured by the council.

NIL GST Rate on Medicines and Medical Supplies

No GST will be imposed on the below-mentioned items after the 56th GST council meeting-

• Important cancer medicines and life-saving drugs (newly exempted in the 56th Council update)
• Healthcare services are provided by doctors, clinics, and ambulance services
• Human blood and its by-products are utilised in medicine
• All kinds of contraceptive goods

5% GST Rate on Medicines and Medical Supplies

After the 56th meeting, the items under the 5% bracket are:

• Diagnostic equipment for malaria, dengue, hepatitis, and other conditions
• Insulin and diabetes-related medicines
• Artificial limbs, wheelchairs, crutches, and walking frames
• Coronary stents/stent systems for use with cardiac catheters
• Siddha, Unani, Homoeopathic, Ayurvedic or Bio-chemic medicines prescribed under the Drugs and Cosmetics Act, 1940
• Deferoxamine or Deferiprone injection
• Disposable micro barriers/sterilised dialysers of artificial kidneys
• Medicines for tuberculosis and AIDS
• Animal/Human blood vaccines
• Oral rehydration salts
• Necessary medical instruments like glucometers and test strips

The 56th GST Council has expanded the 5% category by adding more daily-use medicines and diagnostic kits to enhance affordability.

Read Also: GST (Goods and Services Tax) Impact on the Common Man

18% Rate of GST on Medicines and Medical Supplies

Items at come in the higher slab remain limited, as luxury or non-essential healthcare products. There is an 18% tax on the following items-

• Cosmetic wellness and health products
• Hospital furniture such as examination tables, operating tables and high-end tools
• Hair care products (excluding mehndi paste in cones)
• Nicotine polacrilex gum
• Preparations for dental/oral hygiene, including denture powders and fixative pastes, dental floss, etc.

Before that, there was a 12% slab, but after the 56th GST reforms, such items will get merged into either the Nil or 5% categories, specifically essential medicines and medical-grade supplies.

NIL GST on Medical Services

As per the GST Act (and reaffirmed in the 56th Council Meeting), the below mentioned continue to remain exempted:

• Veterinary and Paramedical Services
• Ambulance transport of patients
• Medical services from noted doctors, hospitals, or clinics
  

NIL GST on Hospitalisation

The Authority of Advance Ruling (AAR) as well as the council has validated that there will be no tax on the hospitalisation. Also, there is no GST on the medicines, implants, and consumables provided during inpatient care as these are being considered under the healthcare services.

Impact of GST on Medicines and Medical Supplies After 56th Council Meeting

The system has been made easier and cheaper for the patients from the shift from multiple slabs (NIL, 5%, 12%, 18%) to a simplified 2-slab structure (5% and 18%) along with wider exemptions.

Key Impacts

• Decreased prices: The pharmaceutical companies are being kept under the ITC uses and uniform GST across states, which lessens the costs of warehousing and distribution.
• Customer advantage: Cost-effective essential medicines that support the middle class.
• Healthcare relief: A zero tax on the insurance premiums, which reduces the household medical expenses.
• Life-saving drugs are cheaper: Either NIL or 5 percent GST is there to the Cancer medicines, TB, AIDS, insulin, and vaccines.
• Simplification: The confusion of the 12% GST slab rate has been removed; it has been incorporated into the lower brackets.