Union Government Cuts GST to Zero on 33 Cancer and Rare Disease Drugs, Expands Relief on Health Products

New Delhi, Sep 2025 : In a historic step aimed at improving access to critical healthcare, the Union government has slashed Goods and Services Tax (GST) rates on 33 cancer and rare disease medicines from 12 per cent to zero. The landmark decision was taken at the 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, which also unveiled sweeping tax reforms across multiple sectors.

Announcing the move, Sitharaman said: “GST on 33 life-saving drugs and medicines has come down from 12 per cent to zero.” She added that the relief would also extend to other essential drugs, health-related products, and medical devices, many of which have seen their GST reduced from 12–18 per cent to 5 per cent or nil.

The reforms are set to take effect on September 22 and mark part of the Council’s broader effort to simplify the indirect tax structure by cutting four slabs to two — scrapping the 12 per cent and 28 per cent brackets, while retaining the 5 per cent and 18 per cent rates.

Among the key healthcare-related changes, life-saving drugs used to treat cancer, rare diseases, and severe chronic illnesses have now been fully exempted from GST. Additionally, several other medicines will shift from the 12 per cent slab to 5 per cent. Even corrective eyewear, such as spectacles and goggles, will now attract only 5 per cent GST instead of the earlier 28 per cent.

In another major relief, GST on individual health and life insurance premiums has been reduced from 18 per cent to nil. This is expected to make insurance more affordable and expand coverage across India. The Finance Minister said the change reflects the government’s commitment to reducing the financial burden on households while strengthening social security.

Medical oxygen, diagnostic kits, and a wide range of medical devices have also seen significant tax reductions. Apparatus and equipment used in medical, surgical, dental, or veterinary practice, along with items like gauze, bandages, diagnostic reagents, and blood glucose monitors, will now be taxed at just 5 per cent instead of 12–18 per cent.

While relief has been extended to health-related sectors, the Council has maintained or increased taxes on harmful products. Pan masala, gutkha, cigarettes, chewing tobacco, zarda, and unmanufactured tobacco will continue under high GST and compensation cess. Goods containing added sugar or sweeteners, including aerated and flavoured beverages, will now be taxed at 40 per cent, up from 28 per cent.

With these reforms, the government aims to make essential healthcare more accessible while discouraging consumption of harmful products, striking a balance between public health priorities and revenue needs.