ZERO GST On Health Insurance And Medicines: What Gets Cheaper And Costlier From September 22 Under GST 2.0 By Modi Govt

Finance Minister Nirmala Sitharaman introduced some changes in Health Insurance and Medicines. These changes will start from September 22, with 18 per cent GST on Medical Insurance and Zero tax on life-saving medicines.

GST Rate Cut 2025: Finance Minister Nirmala Sitharaman on Wednesday (03 September 2025) announced a zero per cent exemption on the GST that existed on health insurance services commencing from September 22.

During the 56th Goods andServices Tax Council (GST) meeting, Sitharaman said, "The Union government also slashed GST rates for other life-saving drugs. As per the revision, life-saving drugs, health-related products, and some medical devices will see a rate cut from 12-18% to 5 per cent or nil". Further adding that GST on 33 life-saving drugs and medicines has come down to from 12percent to zero per cent.

Zero GST On Health Insurance And Life-Saving Medicines

GST, which is known as the Goods and Services Tax Council, decided to exempt all the taxes on Individual life and Health Insurance premiums from tax. Right now, these services have 18 per cent GST. With the change implemented, changes have been made to categories.

These are some of the categories falling under the Nil GST category.

1. Term life policy
2. Unit Linked Insurance Plan
3. Endowment Plans and their reinsurance

GST 2.0 Is Here: What's Getting Cheaper And Costlier?

Here is the complete list of things that will get cheaper from September 22:

1. Many medicines and drugs have come down to 5 per cent, which was earlier 12 per cent.
2. GST on Spectacles and goggles for vision has dropped down to 5 per cent, which was 28 per cent earlier.
3. Medical equipment and supply devices like Wadding gauge, bandages, diagnostic kits and blood glucose monitoring system will also see a sudden drop in GST rates.
4. Products which are linked to harmful health, such as Pan Masala, Gutkha, Cigarettes, Chewing tobacco, Zarda and unmanufactured tobacco, will still continue with the same existing high rates.
5. Food and daily milk products like milk and paneer are also going tax-free where whereas condensed milk, butter, ghee, Cheese and dairy have also dropped from 12 to 5 per cent.
6. Dry fruits and nuts: Almonds, pistachios, hazelnuts, cashews, and dates, earlier taxed at 12%, will now attract just 5%
7. Sugar and confectionery: Refined sugar, sugar syrups, and confectionery items like toffees and candy have shifted to the 5% bracket.
8. Other packaged foods: Vegetable oils, animal fats, edible spreads, sausages, meat preparations, fish products, and malt extract-based packaged foods have been moved to the 5% slab.
9. Namkeens, bhujia, mixture, chabena and similar edible preparations ready for consumption form (other than roasted gram), pre-packaged and labelled to go from 18% to 5%.
10. Waters, including natural or artificial mineral waters and aerated waters, not containing added sugar or other sweetening agents.

The Finance Minister also said,"It's also on structural reforms and for ease of living. We have corrected inverted duty structure problems. We have resolved classification-related issues and we have ensured that there is stability and predictability about the GST".

Key Highlights

1. Effective from September 22, 2025
2. Health and life insurance premiums: 18% GST removed, now tax-free
3. 33 lifesaving medicines: Moved to 0% GST
4. 3 high-cost rare disease and cancer drugs: Now tax-free
5. Medical devices: GST cut from 18% to 5%
6. Everyday goods: Shampoos, soaps, toothpaste, paneer, breads, and milk now cheaper

Dr. Pallavi Sharma, Director, Kailash Hospitals, said, "The GST reforms in the healthcare and medical devices sector are a welcome step towards reducing the financial burden on patients while ensuring greater accessibility of quality care. By lowering GST on critical medical devices and diagnostics, the government has not only made treatment more affordable for patients, especially those with chronic conditions."

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