The Government of India has taken a major step towards affordable healthcare and insurance accessibility by introducing sweeping changes in the GST structure. Effective September 22, 2025, the new reforms aim to reduce the financial burden on households and provide relief to patients dealing with chronic and life-threatening diseases.
Key Highlights of the GST Reform
Category
Previous GST Rate
New GST Rate (w.e.f Sept 22)
Impact
Individual Health Insurance
18%
0%
Major relief in insurance premiums
Individual Life Insurance
18%
0%
Affordable access to life protection
Reinsurance for Individual Plans
18%
0%
Cost savings for insurers and policyholders
33 Lifesaving Drugs
12%
0%
Reduced cost for critical treatments
3 Cancer & Rare Disease Drugs
5%
0%
Life-saving support for patients
All Other Medicines
12%
5%
Lower medical expenses for families
Medical Devices & Diagnostics
18%
5%
Affordable access to health equipment
Sector-Wise GST Breakdown
1. Insurance
Health Insurance (Individual & Family) → GST cut from 18% to 0%
Life Insurance Policies (term, endowment, ULIP) → GST cut from 18% to 0%
Reinsurance for individual policies → Now 0% GST
2. Medicines & Drugs
33 Lifesaving Medicines including therapies for cancer, HIV, kidney disorders → 0% GST
3 Critical Drugs for cancer and rare diseases → GST slashed from 5% to 0%
All Other Medicines → Reduced from 12% to 5%
3. Medical Devices & Diagnostic Kits
Item Type
Previous GST
New GST
Diagnostic Kits & Reagents
18%
5%
Surgical Equipment & Apparatus
18%
5%
Veterinary & Health Devices
18%
5%
Why This Change Matters
Affordable Healthcare for All – Patients suffering from chronic illnesses like cancer, heart disease, and kidney disorders will see significant cost reductions in treatment.
Boost to Insurance Penetration – With 0% GST, more families are likely to opt for health and life insurance, increasing financial security.
Support for Middle-Class Families – Lower medicine and device costs will reduce out-of-pocket expenses.
Strengthening Preventive Care – Affordable diagnostics and devices will encourage early testing and preventive treatments.
Broader Economic & Social Impact
Stakeholder
Impact of GST Cut
Patients & Families
Direct reduction in medical and insurance costs
Insurance Sector
Higher policy adoption, more trust in financial safety
Healthcare Industry
Increased demand for medicines, devices, and coverage
Government
Moves closer to universal healthcare & social security
Comparative GST Rate Table (Before vs After)
Item/Service
Old GST Rate
New GST Rate
Health Insurance Premiums
18%
0%
Life Insurance Policies
18%
0%
Lifesaving Drugs (33 items)
12%
0%
Cancer & Rare Disease Drugs
5%
0%
All Other Medicines
12%
5%
Medical Devices & Diagnostics
18%
5%
The GST reform of September 2025 is a landmark policy decision. By making insurance GST-free and cutting taxes on medicines and medical equipment, the government has provided a dual benefit: reduced treatment costs and improved access to financial protection. This is expected to strengthen India’s healthcare system, encourage insurance adoption, and reduce the economic stress of medical bills.