From Hospital Bills To Insurance Premiums: GST Cuts Put More Money Back In Your Pocket

New Delhi: The 56th GST Council meeting held on 3rd September 2025 in New Delhi has brought major relief to households. Families will now pay less on insurance and healthcare, as the Council decided to cut or remove GST on many essential services and products. This step will directly reduce costs for the middle class and provide financial security at lower prices.

GST Removed On Insurance Premiums

One of the biggest announcements is the removal of GST on insurance. Until now, people had to pay 18 percent GST on their health and life insurance premiums. This made policies expensive and added to the financial pressure on households.

The Finance Minister confirmed that GST will no longer apply to individual life insurance policies. This includes term life policies, ULIPs, and endowment plans. Reinsurance of these products has also been exempted.

Health insurance has also been brought under the exemption. Individual health insurance policies, family floater plans, and policies for senior citizens will no longer attract GST. Reinsurance of health insurance products will also not be taxed.

This means premiums will be cheaper. For example, if a family was paying ₹20,000 as annual premium earlier, they had to pay an additional ₹3,600 as GST. Now, this extra amount will not be charged. The step is expected to increase insurance coverage and make financial protection more affordable for the middle class.

Cheaper Medicines After GST Cuts

The Council also announced major relief on medicines. Many life-saving drugs that were earlier taxed at 12 percent are now completely exempt. These include medicines for cancer treatment, rare diseases, and other critical therapies. The removal of GST ensures that patients will not have to pay extra tax on top of already costly treatment.

Some medicines earlier charged at 5 percent have also been moved to the nil category. These medicines are used for very specific conditions and were already expensive for patients. With the exemption, they will now be more affordable.

Lower Taxes On General Medicines

A large number of medicines have seen their GST rate cut from 12 percent to 5 percent. These include treatments for chronic illnesses such as asthma, cancer, and immune system disorders. This reduction will help patients who need regular treatment.

The Council has also cut GST on medicines across different systems of treatment. Allopathic medicines, as well as Ayurvedic, Unani, Siddha, and homoeopathic medicines, will now attract only 5 percent GST instead of 12 percent. This will benefit households across the country.

Relief on Medical Supplies and Equipment

Medical grade oxygen, which was earlier taxed at 12 percent, is now under 5 percent GST. This is vital for hospitals and patients during emergencies.

Bandages, gauze, wadding, and surgical dressings will also be cheaper, as their tax rate has been reduced from 12 percent to 5 percent. These are everyday hospital items that are essential for treatment.

Diagnostic kits and reagents, used for medical tests, are now at 5 percent instead of 12 percent. Medical thermometers have also been reduced from 18 percent to 5 percent.

For diabetic patients, glucometers and test strips have been reduced from 12 percent to 5 percent. Since these products are used daily, the savings will be continuous and significant.