REGULATORY · MARKET STRUCTURE · COMPETITIVE · INDIA
India GST changes affecting cancer drugs, medical equipment, and tobacco taxation
Change
India’s GST Council (56th meeting) recommended zero-rating 33 lifesaving drugs (including cancer drugs) and certain medical equipment, while raising the GST slab on tobacco products to 40%.
Why it matters
The GST rejig changes the tax incidence on cancer treatment by exempting 33 lifesaving drugs from GST (moving from 12% to 0%) and moving three critical rare-disease/cancer drugs from 5% to 0%, including some patented drugs without generic alternatives. The same set of reforms removes GST on certain medical equipment, reducing tax-loaded procurement costs for hospitals and patients. In parallel, tobacco products move to a 40% GST slab, the highest category, changing pricing and revenue assumptions for tobacco manufacturers and distributors. AIIMS researchers report modeling that attributes over USD 762.5 million in savings to AB-PMJAY under the revised GST structure (modeling limited to below-poverty-line coverage).
Implications
- • Lower tax-inclusive prices for specified cancer/rare-disease drugs and some equipment
- • Pricing/reimbursement baselines shift for AB-PMJAY and other payers using GST-inclusive costs
- • Patented, no-generic drugs included in exemptions change net-of-tax affordability dynamics
- • Tobacco supply chain faces higher indirect tax burden at 40% GST slab
Who is affected
- • Cancer patients and households purchasing exempted drugs/equipment
- • Hospitals/oncology centers procuring affected medical equipment and drugs
- • Pharma manufacturers/importers and distributors of the exempted lifesaving drugs
- • Tobacco manufacturers, distributors, and retailers subject to the 40% slab
Source
Topics
World & Politics Policy & Regulation Law & Public Safety Compliance Health & Medicine Public Health Healthcare Systems