The GST Council has approved a significant reduction in tax rates on medical devices and consumables. Finance Minister Nirmala Sitharaman announced on Wednesday (September 3) that all medical, surgical, dental, and veterinary devices, which were previously taxed at 18%, will now be taxed at 5% under a simplified two-tier GST structure.
Similarly, commonly used healthcare items such as gauze, bandages, diagnostic kits, reagents, and glucometers will see GST rates slashed from 12% to 5%.
Healthcare leaders have welcomed the reform, calling it a transformative move to improve accessibility, affordability, and preventive care. They highlighted that the changes would not only reduce out-of-pocket expenses for patients but also boost diagnostics, medical device manufacturing, and investments in the sector.
Dr. Harsh Mahajan, Founder & Chairman of Mahajan Imaging & Labs and Chairman of the FICCI Health Services Committee, praised the step but urged the government to extend the rate cut to equipment maintenance contracts as well. “Hospitals and diagnostic centres currently bear significant embedded taxes since they cannot claim input tax credit on essentials like equipment leases and maintenance. Reducing GST in these areas will further ease the financial burden on patients,” he said.
Bhanu Prakash Kalmath SJ, Partner and Healthcare Industry Leader at Grant Thornton Bharat, emphasized the far-reaching impact of the decision. “Lowering GST on drugs, consumables, and equipment will directly reduce treatment costs and provide relief to both patients and hospitals,” he noted.
Ameera Shah, President of NATHEALTH and Executive Chairperson of Metropolis Healthcare Ltd, underlined the reform’s focus on preventive care. “This move affirms the importance of preventive health and medical technology in strengthening healthcare delivery. By easing costs and standardising GST across preventive, curative, and rehabilitative care, the reform will expand access to early disease detection and quality healthcare,” she said.
From the diagnostics industry, Jatin Mahajan, President of the Association of Diagnostics Manufacturers of India (ADMI), called the step a boost to “Make in India.” He said, “A uniform 5% GST on medical devices and diagnostic equipment, along with zero GST on insurance and relief on essential medicines, will reduce patient expenses and encourage early diagnosis. Simplifying the tax structure will also cut compliance hurdles, ease working capital pressures, and encourage investment in R&D and manufacturing competitiveness.”
Monika Arora, Partner at Deloitte India, highlighted that while affordability would improve, the changes may increase working capital strain due to duty inversion. “The Council’s announcements show strong government commitment to citizen welfare and industry growth. The reduced costs will also make India more attractive for medical tourism,” she said.
Industry experts see this GST revision as a landmark step for healthcare, promising to lower treatment costs, promote preventive health initiatives, and support innovation in medical technology. While operational concerns remain, particularly around duty structure, the overall sentiment is optimistic that these reforms will lead to a more inclusive and affordable healthcare ecosystem in India.
