A ‘health check’ for the new GST health-care reforms, Pg10

Key Highlights:

• GST on individual health and life insurance premiums has been completely removed from September 22, 2025, making insurance 18% cheaper.
• Hospital rooms costing less than ₹5,000 a day remain GST exempt, while non-ICU rooms above this threshold attract 5% GST without input tax credit.
• GST on most medicines is lowered to 5%, and life-saving drugs now have zero GST, simplifying compliance and potentially lowering prices.
• Medical devices and diagnostics are now largely under a uniform 5% slab, reducing procurement costs for hospitals.
• GST on gymnasiums, fitness centers, yoga studios, salons, barbers, and wellness services is reduced from 18% to 5%.
• Sugary drinks are moved to a new 40% "sin goods" slab to discourage consumption.

Detailed Insights:

• The removal of GST on insurance aims to increase insurance coverage, which currently stands at only about 3.7% of GDP, compared to a global average of 6.8%.
• Critical care units like ICU, CCU, ICCU, and NICU remain fully exempt from GST regardless of cost, ensuring that life-saving care remains tax-free.
• Lowering GST on medicines and medical devices is expected to reduce costs for hospitals and laboratories, potentially leading to lower prices for patients on routine tests.
• The reduction in GST on preventive health services and personal care items is intended to promote healthier living and make these services more accessible to everyday households.
• The high taxation on cigarettes (28% GST plus compensation cess) and sugary drinks is aimed at discouraging consumption and generating revenue for public health.
• These GST reforms align with the 2047 Viksit Bharat goals, aiming to reshape how India funds health care and improve access to treatments and preventive services.

Key Concepts Involved:

• Goods and Services Tax (GST): Goods and Services Tax (GST) is a unified indirect tax on supply of goods and services, replacing multiple indirect taxes, to create a single national market.
• Input Tax Credit: Mechanism to reduce tax liability by claiming credit for taxes paid on inputs.
• Viksit Bharat: A vision for India to achieve developed nation status by 2047.