Source: The post India’s GST reforms strengthen universal health coverage has been created, based on the article “A ‘health check’ for the new GST health-care reforms” published in “The Hindu” on 12 September 2025. India’s GST reforms strengthen universal health coverage.
UPSC Syllabus Topic: GS Paper 2-Issues relating to development and management of Social Sector/Services relating to Health. And GS paper 3-Indian Economy and issues relating to planning, mobilisation of resources, growth, development and employment.
Context: India’s GST overhaul targets affordable, accessible health care. It realigns taxes on insurance, hospital charges, medicines, devices, diagnostics, and daily-use products. Key premium changes start on September 22, 2025. The goal is universal coverage and stronger preventive health.
For detailed information on GST 2.0 reforms boost growth and simplify India’s taxes read this article here
What changed in insurance and hospital taxation?
- Insurance relief: GST on individual health and life insurance is removed. It covers term, ULIP, endowment, family floaters, and senior-citizen plans, and reinsurance. Premiums become 18% cheaper. A family paying ₹50,000 earlier paid ₹9,000 as GST. Gains depend on pass-through by insurers.
- Room charge rules: Hospital rooms below ₹5,000/day stay exempt. Non-ICU rooms above ₹5,000/day continue to attract 5% GST without input tax credit (since July 2022). ICU/CCU/ICCU/NICU remain fully exempt regardless of tariff.
- Treatment stays untaxed: Core services by hospitals, doctors, and paramedics remain GST-exempt. No change from the 2022 framework.
How do reforms affect medicines, devices, and diagnostics?
- Drug taxes simplified: GST on most medicines is 5% and life-saving drugs are zero-rated.
- Devices and diagnostics at 5%: Most medical devices and diagnostic products shift to a uniform 5% slab. For example, CT scan machines fall from 18% to 5%, easing hospital capital costs.
- Cheaper tests if passed on: Laboratory services remain exempt, but inputs—kits, reagents, equipment—are taxed less. If labs pass savings on, routine tests such as blood tests, X-rays, and MRIs may become cheaper. Pharmacies and small clinics gain competitiveness.
- Commercial adjustments: Manufacturers and distributors will revise pricing and contracts. Hospitals and labs can negotiate better terms with insurers and corporate clients.
How do reforms encourage prevention and healthier choices?
- Wellness services cheaper: GST on gyms, fitness centres, yoga studios, salons, barbers, and wellness services falls from 18% to 5%.
- Personal care at 5%: Hair oil, soap bars, shampoos, toothpaste, toothbrushes, talcum powder, face powder, shaving cream, aftershave move to 5%. A ₹100 shampoo now costs ₹105 with GST.
- Deterring harmful products: Cigarettes retain 28% GST + compensation cess (effective 52%–88%). A new 40% “sin goods” slab is announced and applies only after cess liabilities are cleared. Sugary drinks shift to this 40% slab from 28% + cess.
What outcomes will determine success?
- System-wide alignment: The reforms support the 2047 Viksit Bharat goals by lowering insurance taxes, cutting input costs, and backing preventive care.
- Real-world tests should monitor following outcomes: timely and affordable access to treatment, routine use of preventive and wellness services, consumer trust in the health system, reductions in misuse of antibiotics and Schedule H drugs, and lives saved..
- Coverage gap addressed: Insurance relief targets low coverage at 3.7% of GDP vs 6.8% global.
Question for practice:
Examine how the recent GST reforms reduce health-care costs and expand access through changes to insurance, medicines and devices, and preventive services.
