Key points
- From 22 September 2025, most medicines moved from 12% to 5% GST.
- A list of 33 life-saving drugs moved to nil, and three drugs for cancer and rare diseases moved from 5% to nil.
- Most medical devices, diagnostic kits, glucometers and corrective spectacles moved to 5%.
- Individual health and life insurance premiums became exempt.
- Healthcare services by hospitals and doctors remain exempt, with a few exceptions such as cosmetic surgery.
Why healthcare saw big changes
Healthcare costs are a major worry for Indian households, and GST was one part of that cost. Medicines sat mostly at 12%, many medical devices at 12% or 18%, and health insurance premiums at 18%. The GST 2.0 reform, approved at the 56th GST Council meeting on 3 September 2025 and in force from 22 September 2025, cut most of these rates.
New GST rates in healthcare at a glance
| Item | Earlier rate | Rate from 22 Sept 2025 |
|---|---|---|
| Most medicines and drugs (allopathic, ayurvedic, homeopathic) | 12% | 5% |
| 33 notified life-saving drugs | 12% | Nil |
| 3 notified drugs for cancer and rare diseases | 5% | Nil |
| Medical, surgical and dental instruments and apparatus | 12% / 18% | 5% |
| Diagnostic kits and reagents | 12% | 5% |
| Glucometers and test strips | 12% | 5% |
| Thermometers | 18% | 5% |
| Corrective spectacles | 12% | 5% |
| Bandages, gauze and surgical gloves | 12% | 5% |
| Individual health insurance premiums | 18% | Exempt |
| Services of hospitals, doctors and diagnostic labs | Exempt | Exempt (unchanged) |
The exact rate depends on the HSN code and the notification entry. Some medicines and devices have specific conditions. Check each item, especially high-value products, against the official notification.
Medicines and pharmacies
For most pharmacies and distributors, the biggest change is that the bulk of medicines now carry 5% GST instead of 12%. Life-saving drugs on the notified list carry no GST at all.
- Update item rates: change the GST rate on every medicine in your billing software, using HSN codes to find them quickly.
- MRP and selling price: where GST fell, the customer should see the benefit. Check MRP-based pricing on your bills.
- Exempt drugs and credit: if you sell drugs that are now exempt, the GST you paid on buying them can’t be claimed as credit. Your software should treat those sales separately.
- Old stock: stock bought at 12% is sold at the new rate. Credit already taken on that stock is not lost.
Read our pharmacy software page for how batch, expiry and GST work together at the counter.
Medical devices and diagnostics
Instruments and apparatus used in medicine, surgery and dentistry, diagnostic kits and reagents, glucometers and test strips, thermometers and corrective spectacles all moved to 5%. For device distributors and hospitals buying equipment, this lowers the tax cost of purchases. Hospitals whose services are exempt usually can’t claim credit on these purchases anyway, so the lower rate directly reduces their costs.
Health and life insurance
Premiums on individual health insurance and individual life insurance policies, including family floater and senior citizen policies, became exempt from GST. Group policies bought by employers were not part of this exemption and continue to carry GST. Insurers can no longer claim credit on inputs used for these exempt policies.
Healthcare services
Services provided by clinical establishments, doctors and paramedics were already exempt and remain so. A few things are treated differently:
- Cosmetic and plastic surgery, unless needed to restore function or correct a defect, is not covered by the exemption.
- Hospital room rent above ₹5,000 per day for non-ICU rooms is taxed at 5% without input tax credit.
- Fitness and wellness services such as gyms and yoga centres moved to 5% without credit under GST 2.0.
What healthcare businesses should do now
- Update every item rate Go through medicines, devices and consumables by HSN code and apply the new rates.
- Mark exempt items Make sure nil-rated drugs and exempt services are recorded as exempt, not as 0% taxable.
- Review input tax credit Check whether any credit needs to be reversed for inputs used in exempt supplies.
- Pass on lower prices Update selling prices and keep a record of the changes.
- Confirm with your CA Especially for hospitals, diagnostic centres and businesses with mixed taxable and exempt sales.
This guide explains GST rules in simple words and reflects the law as we understand it on 28 October 2026. Rules, rates and dates change, so please confirm with your CA or the official notifications before acting on it.