The 56th GST Council has reduced GST rates on medicines and medical devices from September 22, 2025, to ease healthcare costs. Thirty-six lifesaving drugs, contraceptives, and sanitary products are now GST-exempt. Tax on medical devices like diagnostic kits, oxygen, surgical tools, glucose monitors, x-ray machines, insulin, vaccines, wheelchairs, and assistive devices has been lowered from 12% to 5%. To ensure patients benefit, the government has mandated a reduction in MRPs to reflect the new GST slabs, preventing companies from profiting instead. While manufacturers face challenges with old stock and pricing adjustments, they are allowed a 3-month window to clear or relabel inventory. Public awareness campaigns will guide consumers, ensuring this reform improves affordability and access to healthcare.
The 56th GST Council for India has recommended reducing GST rates on medication and medical devices starting September 22nd, 2025. With inflation and the rising cost of medical care, this move is welcome and can hopefully provide some financial relief to patients. The cost of medical supplies is significantly inflated for chronic patients because of GST, even though an effort had been made to keep them under a relatively lower GST slab. Depending on the categorization of the medical supplies, some medicines and medical equipment were taxed lower at 5%, while others were taxed at a standard rate of 12% or 18%.
Under the new GST reforms, 36 critical lifesaving medications have been completely exempted from GST. This is a good move, and will substantially lower patient costs and save lives. Sanitary napkins, tampons and all contraceptives will also not be taxed under this GST reform.
Taxation rates have also been lowered on medical devices and supplies, from 12% to 5%. This includes all diagnostic kits, surgical instruments, anaesthetics, medical-grade oxygen, surgical gloves, glucose monitors, spectacles, x-ray machines and associated supplies. Vaccines, insulin, oral rehydration salts, artificial limbs, artificial kidneys, wheelchair components, any kind of assistive device, ostomy appliances and baby formula will also be taxed at 5% from September 22nd, 2025.
This restructuring of the GST slabs will lower costs for individual patients, as well as for hospitals, ultimately improving diagnostics and patient care.
In the Indian pharmaceutical market, medicines, medical devices and supplies are labelled with a maximum retail price. This MRP is calculated factoring in the GST on that product, according to the old GST slabs. The pharmaceutical company collects the GST from the consumer and pays it to the government. When the GST slabs change, the pharmaceutical company pays lower GST to the government. However, if MRP is not changed to reflect this, the consumer does not get the benefit of the lowered GST, and it will in fact inflate the pharmaceutical company’s profits. This is not the intention of this reform. The Indian Government has now ordered that the benefits of the GST reduction must be passed on to the patient. This means that the MRP of the medicines will change to reflect the change in GST, so the company’s profits stay the same, and the consumer pays less overall.
The restructuring of GST for pharmaceutical products is welcomed by the patients who have been bearing the brunt of inflation and high cost of treatment. However, revising GST creates some short-term challenges for the manufacturers. Existing inventory, which is distributed across pharmacies in the country, from major metropolises to small towns and villages, has the old MRP which was calculated factoring in the old GST rules. This presents a large-scale challenge to distributors and retailers. Do they recall and re-label all the old stock that they cannot sell by September 22nd, and replace with new stock with revised pricing? The logistical challenge this poses could result in increased spending and potential losses for the pharmaceutical companies.
To by-pass these challenges, the government has issued a notice that companies don’t have to recall or re-label existing stock with the old MRP. Instead, they are instructed to enforce the new pricing with retailers to ensure that they comply with the reduced pricing. This is crucial information for consumers as well. The government has recommended that advertisements and notices be released in print and digital media, as well as social media, to educate and inform consumers of the reduced GST. Companies are also advised to update pricing on their websites, for consumers to cross-check.
Pharmaceutical companies have been given a 3-month window to clear old inventory and restock with products with the revised MRP. Any unsold stock with the old MRP printed on it should be relabeled, by the end of the 3-month period. As a patient, stay informed and avail the benefits of this positive reform.
The revised GST rules on medical devices are a significant step toward making healthcare more affordable and accessible for patients across India. Staying informed helps patients fully benefit from these reforms and avoid unnecessary costs. Kauvery Hospital, with advanced facilities and centres in Chennai, Hosur, Salem, Tirunelveli, and Trichy, remains committed to transparent, patient-centric care by supporting cost-effective treatment and ensuring access to essential medical technologies.
What changed in the new GST rules for medical devices in 2025?
From September 22, 2025, GST on many medical devices was reduced from 12% to 5%, and 36 lifesaving medicines were made GST-exempt. This reform aims to reduce healthcare costs and improve affordability for patients across India.
How will the GST reduction lower my medical bills?
The government has mandated that companies reduce the Maximum Retail Price to reflect the lower GST. This ensures patients directly benefit through reduced prices on medicines, diagnostic kits, insulin, vaccines, oxygen supplies, and assistive devices.
Which medical products are now cheaper due to GST cuts?
Products now taxed at 5% include diagnostic kits, surgical instruments, glucose monitors, x-ray machines, insulin, vaccines, wheelchairs, artificial limbs, oral rehydration salts, and baby formula. Sanitary napkins and contraceptives are now GST-free.
Will hospitals and diagnostic centres also benefit from the GST reduction?
Yes. Lower GST reduces procurement costs for hospitals and diagnostic centres. This can lead to more affordable testing, procedures, and treatments for patients.
What happens if a medicine still shows the old higher MRP?
Pharmaceutical companies have a 3-month transition period to clear or relabel old stock. Even if old MRPs are printed, retailers must implement reduced pricing based on the new GST rates.
How can I check if I am getting the benefit of the new GST rules?
Patients should verify updated prices through official company websites, pharmacy bills, and public notices. The government has advised awareness campaigns to ensure consumers receive the benefit of reduced GST.
Kauvery Hospital is globally known for its multidisciplinary services at all its Centers of Excellence, and for its comprehensive, Avant-Grade technology, especially in diagnostics and remedial care in heart diseases, transplantation, vascular and neurosciences medicine. Located in the heart of Trichy (Tennur, Royal Road and Alexandria Road (Cantonment), Chennai (Alwarpet, Radial Road & Vadapalani), Hosur, Salem, Tirunelveli and Bengaluru, the hospital also renders adult and paediatric trauma care.
Chennai Alwarpet – 044 4000 6000 • Chennai Radial Road – 044 6111 6111 • Chennai Vadapalani – 044 4000 6000 • Trichy – Cantonment – 0431 4077777 • Trichy – Heartcity – 0431 4077777 • Trichy – Tennur – 0431 4022555 • Maa Kauvery Trichy – 0431 4077777 • Kauvery Cancer Institute, Trichy – 0431 4077777 • Hosur – 04344 272727 • Salem – 0427 2677777 • Tirunelveli – 0462 4006000 • Bengaluru – 080 6801 68011
