How GST has Impacted India’s Healthcare Sector?
India is currently known as the “pharmacy of the world” as it produces over 60,000 generic drugs in different 60 therapeutic categories. Though the healthcare sector is facing a lot of issues due to various reasons, it still provides the most affordable healthcare treatments all over the world. The Indian Pharmaceutical industry has witnessed exponential growth. Various factors have contributed to such stupendous growth. This article will provide a complete guide on the Impact of GST on India’s Healthcare Sector, what its drawbacks are, and the taxability of pharma products, machinery, and services under GST.
Taxability of Pharmaceutical Products
| Products | Applicable GST Rates |
| Contraceptives | 0% |
| Insulin | 5% |
| Animal or human blood vaccines | 5% |
| Hepatitis diagnostic kits | 5% |
| Desferrioxamine deferiprone or injection | 5% |
| Oral rehydration salts | 5% |
| Medicines | 5% |
| Ayurvedic medicines, Anesthetics, Sterile sutures, Potassium Iodate, Iodine steam, Medicinal grade, hydrogen peroxide, glands, and other organs for organo-therapeutic use, homeopathic siddha or biochemical systems medicaments | 12% |
| Surgical products | 12% |
| Disinfectants, tampons | 18% |
| Wheelchairs | 18% |
| Hot water bags | 28% |
| Wing scale | 28% |
Exempted Healthcare Services under GST
Life-saving drugs, healthcare services, and medical devices are not taxable under GST. These services in the healthcare industry are important for maintaining a healthy life and, therefore are not taxable under the goods and services tax in India.
Under GST, duty charged on the technical machinery and equipment needed by the health care industry is allowed as the input tax credit. This results in an overall reduction in prices leading to better health care services.
GST Rates on Hospital Rooms
Basic hospital rooms costing an average amount do not attract any GST though there is still GST applicable on the hospital rooms. The rate of taxability ranges from 0% to 28% based on the final cost of the room.
| Room Rent per Night | Applicable GST Rates |
| Up to Rs 1000 | 0% |
| Between Rs 1000 and Rs 2499 | 12% |
| Between Rs 25000 and Rs 7499 | 18% |
| Above Rs 7500 | 28% |
GST & Medical Tourism
India’s medical tourism sector is one of the biggest in the world. Approximately 2 million patients outside the world travel to India for medical and wellness treatments. The medical tourism industry is going to reach $13 billion by 2026.
The implementation of GST has reduced the cost of insurance, pharmaceuticals, and international travel leading to quality healthcare. The simplified and unified structure of the GST culminated in the growth of medical tourism in the country and it is expected to rise despite several big competitors in the market.
Major Concerns in Healthcare Sector under GST
Life-saving drugs are kept out of the GST taxability earlier some of the states charged 5% taxes on the medicines. However, the implementation of GST has changed everything. One of the major concerns in the healthcare sector is the inverted Duty Structure that negatively affects domestic manufacturers.
The Inverted Duty Structure arises when the input cost is higher than the output. As the raw materials cost more than the finished products, the GST is higher in the input leading to the accumulation of unutilized Input Tax Credit. To amend this drawback, the GST has introduced a refund of the accrued credit as per section 54 (3) of the CGST Act 2017. Under this section, a registered person can claim a refund of unutilized ITC at the end of any tax period. This article has helped individuals understand the Impact of GST on India’s Healthcare Sector.
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