GST on Healthcare and Pharma 2026 — Exemptions, Medicine Rates, GST 2.0 Changes | RushTax Blog

Healthcare is one of the most GST-sensitive sectors in India. While core medical services are exempt, medicines, medical devices, and diagnostic services have specific GST rates. The GST 2.0 reforms (effective September 22, 2025) brought significant relief to the healthcare sector. Here is the complete guide.

Core Healthcare Services — Exempt from GST

The following healthcare services are completely exempt from GST:

Medical consultation and treatment by doctors
Surgical procedures (inpatient and outpatient)
Diagnostic services (blood tests, X-rays, MRI, CT scans)
Physiotherapy and occupational therapy
Dental treatment (except cosmetic)
Ayurvedic, Unani, Siddha, and Homeopathic treatments
Ambulance services
Blood banks
Organ transplantation services
Mental health services

Who is exempt: Services provided by:

Hospitals (government and private)
Clinics and nursing homes
Authorized medical practitioners
Paramedical professionals

Exception: Cosmetic surgery and hair transplantation (not medically necessary) attract 18% GST.

GST on Medicines — Post GST 2.0 (September 22, 2025)

The GST 2.0 reforms significantly reduced GST on medicines:

Medicine Category	Old Rate	New Rate (Post Sept 2025)
Essential medicines (most common drugs)	12%	5%
Lifesaving drugs (36 specified drugs)	5%/12%	0%
Oncology and rare disease drugs	12%	0%
Vaccines	5%	5% (unchanged)
Ayurvedic medicines	12%	5%
Homeopathic medicines	12%	5%

36 lifesaving drugs at 0% GST include: Drugs for cancer, rare diseases, HIV/AIDS, and other critical conditions. The full list is available on the CBIC website.

GST on Medical Devices — Post GST 2.0

Medical Device	Old Rate	New Rate
Diagnostic kits and reagents	12%/18%	5%
Medical devices (general)	12%/18%	5%
Surgical instruments	12%	5%
Orthopaedic implants	12%	5%
Hearing aids	5%	5% (unchanged)
Wheelchairs	5%	5% (unchanged)
Insulin pumps	12%	5%

GST on Health Insurance Premiums — Removed

One of the most significant GST 2.0 changes: GST on health and life insurance premiums has been removed (effective September 22, 2025).

Previously, health insurance premiums attracted 18% GST, making insurance expensive. The removal of this GST makes health insurance more affordable for individuals and families.

Impact: A ₹20,000 annual health insurance premium previously cost ₹23,600 (including 18% GST). Post September 22, 2025, it costs ₹20,000.

GST on Diagnostic Services

Diagnostic services provided by hospitals and diagnostic labs are exempt from GST:

Blood tests and pathology
Radiology (X-ray, MRI, CT scan, ultrasound)
ECG and cardiac tests
Genetic testing

Exception: Diagnostic services provided by non-medical entities (e.g., corporate wellness programs) may attract 18% GST.

GST on Pharmacy and Medicine Retail

Pharmacies selling medicines to consumers:

Medicines attract GST at the applicable rate (5% for most, 0% for lifesaving drugs)
Pharmacies must be GST-registered if annual turnover exceeds ₹40L (goods)
ITC available on medicines purchased for resale

Composition scheme for pharmacies: Pharmacies with turnover up to ₹1.5 crore can opt for the composition scheme (1% GST on turnover, no ITC).

GST on Hospital Room Rent

Room Type	GST Rate
ICU, ICCU, NICU	Exempt
General ward	Exempt
Private room (rent ≤ ₹5,000/day)	Exempt
Private room (rent > ₹5,000/day)	5%

Room rent above ₹5,000/day attracts 5% GST. This applies to the room rent component only, not the medical treatment.

GST on Medical Tourism

India is a major medical tourism destination. For foreign patients:

Medical services are exempt from GST (same as domestic patients)
Accommodation and food provided by hospitals to foreign patients: 5% GST (if room rent > ₹5,000/day)
Medical tourism facilitation services: 18% GST

ITC for Hospitals and Healthcare Providers

Since core healthcare services are exempt from GST, hospitals generally cannot claim ITC on their inputs (medicines, equipment, etc.). This is the trade-off for the exemption.

Exception: If a hospital provides both exempt services (medical treatment) and taxable services (cosmetic surgery, room rent above ₹5,000/day), it can claim proportionate ITC on inputs used for taxable services.

GST Registration for Healthcare Entities

Entity	Registration Required?
Hospital (only exempt services)	Not required (but voluntary registration possible)
Hospital (mixed services including taxable)	Required if taxable turnover > ₹20L
Pharmacy	Required if turnover > ₹40L
Medical device manufacturer	Required if turnover > ₹40L
Diagnostic lab (only exempt services)	Not required

Frequently Asked Questions

Is GST applicable on blood transfusion?

No. Blood transfusion is a medical service and is exempt from GST.

Does a doctor need to charge GST on consultation fees?

No. Medical consultation fees are exempt from GST. Doctors do not need to charge GST on their consultation fees.

Is GST applicable on medical insurance claims?

No. Insurance claims are not a supply of goods or services — they are indemnification. GST does not apply to insurance claim payouts.

What is the GST rate on COVID-19 vaccines?

COVID-19 vaccines attract 5% GST. This rate has been maintained since the pandemic period.

Is GST applicable on Ayurvedic treatment at a wellness spa?

Ayurvedic treatment at a hospital or clinic by a qualified practitioner is exempt. However, Ayurvedic treatments at wellness spas and beauty centers (not by qualified practitioners) attract 18% GST.

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