GST Reforms in Healthcare

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Context:

The Government of India has introduced GST reforms in September 2025 to make healthcare, insurance, medicines, and preventive services more affordable and accessible.

Direct Relief to Households

Insurance Premium Exemption:GST on individual health and life insurance premiums has been removed, making insurance 18% cheaper and directly reducing financial burden on families.
Hospital Room Charges:Non-ICU rooms above ?5,000 per day continue to attract 5% GST, while ICU, CCU, ICCU, and NICU services remain fully exempt to ensure critical care is untaxed.
Core Medical Services:Treatment services by hospitals, doctors, and paramedics remain GST-exempt, ensuring that essential medical care continues to be tax-free.

Business and Medical Infrastructure Impact

Medicines and Drugs:GST on most medicines is reduced to 5%, while life-saving drugs are placed under zero tax, reducing patient costs and simplifying compliance.
Medical Devices:Diagnostic equipment like CT scan machines are now taxed at 5% instead of 18%, lowering procurement costs for hospitals and potentially reducing patient charges.
Laboratory Services:While laboratory services are GST-exempt, their inputs now attract lower GST, enabling cost reductions in common tests such as X-rays, MRIs, and blood tests.

Preventive Health and Public Welfare

Preventive Services:GST on gyms, fitness centres, yoga studios, salons, and wellness services has been reduced from 18% to 5%, encouraging preventive healthcare practices.
Sin Goods Taxation:Sugary drinks have been shifted to a new 40% GST slab, while cigarettes remain heavily taxed at 28% GST plus cess, discouraging unhealthy consumption.
Personal Care Products:GST on daily use items like soaps, shampoos, toothpaste, and shaving products has been cut to 5%, making healthier living more affordable for households.

Practice Question:

The GST reforms of 2025 are being projected as a major step towards universal health coverage in India. Critically evaluate their potential to balance affordability for households, sustainability for healthcare providers, and revenue generation for the government. (250 words)

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