Healthcare Relief from GST Council: Lower Rates on Medical Devices and In vitro diagnostics(IVDs)

CDSCO Notifications Regarding Changes in GST Rates: What Should Manufacturing, Importing, and Supply Companies be aware of?

The Central Drugs Standard Control Organisation (CDSCO) has lately released many important notifications after the GST Council decided to lower the tax rates of medicines, medical devices, and diagnostics. These notifications have been released to ensure that the revised tax rates are reflected in the market and the patient gets the benefit out of it. Here are the key takeaways:

There will be No Urgent Re labelling for Stocks Before September:

The products that have been launched in the market before 22 September 2025 do not have to be mandatorily recalled and re-stickered. Rather, compliance may be ensured through revised price lists and proper communication to retailers. [See PIB FAQs-2]

Revised Price Lists Must Be Published:

• All manufacturers of drugs, formulations, and medical devices should make the requisite effort to ensure that all elements in the chain up to the level of the retailer are compliant with the new MRP in the wake of the revised GST rates taking effect from 22nd September 2025.

• Manufacturers should also ensure that they convey the revised price list in the wake of the new GST rates to the retailers and other elements in the chain and notify the Department in this regard.

• Retailers and wholesalers should also be careful about updating the billing system in light of the new GST-based prices from 22nd September 2025.[Refer PIB Frequently Asked Questions-2 (FAQs-2)]

Sticker Permission for Medical Devices:

Regarding Class C and Class D medical devices, it has been approved by CDSCO that manufacturers and importers can put the sticker or new labels on the stock already available in the market to show the new MRPs. [See Notice]

Grace Period for Old Stock

The products manufactured or imported before the modification in the GST rates can be sold in the market with the new MRP displayed on the sticker, stamp, or tag. Such practice shall continue till 31 December 2025 or until the sale of old stock whichever is earlier. 

Submission of Reports to Authorities:

• Moreover, the Government of India, Ministry of Finance (Department of Revenue) has also come up with a separate notice indicating the manner in which revised  pricing information needs to be provided.

• Companies need to give revised or supplementary pricing lists (in prescribed Form) to the dealers, retailers, State Drug Controllers, and concerned authorities. It is important to ensure that there is clarity on revised MRPs.

• Along with this, stakeholders need to file compliance reports. Report number one has to be filed by 30th September 2025 with the Board and emailed to the concerned email address. After that, monthly reports have to be filed till March 2026 by 20th of every month.

To know more about the changes in GST slabs and its impact on medical devices, in vitro diagnostics, and life-saving drugs, click here. The above information is as of September 17, 2025. Keep watching this space for any other updates.

Goods and Services Tax (GST):

One of the most substantial tax reformations in India is the Goods and Services Tax (GST) implemented in July 2017. It aimed at replacing the complex tax regime involving both central and state taxes with a single national taxation system.

Prior to the introduction of the GST, firms paid different levies such as VAT, excise duty, service tax, and even entry charges. Therefore, businesses experienced the necessity to pay "tax on tax," resulting in additional expenses for firms and citizens.

GST made the process more simple and uniform since all the taxes were merged into one. Thus, the process of compliance became more convenient for enterprises, while customers benefited from transparency and lower additional expenditures.

The difference between GST and previous types of taxes lies in the area where it is charged, meaning that the revenues from GST go to the state of the consumer instead of the producer. In addition, the system has four basic slabs (5%, 12%, 18%, and 28%), but, with the implementation of the Next-Gen GST Reforms 2025, there will be two slabs instead (Two broad rates – 18% and 5%, plus special 40% tax on selected de-merit goods).

In healthcare, GST is particularly significant since it influences the prices of medicines, medical devices, and services.

How Patients Benefit from GST Cuts?

After reducing the GST on a particular medicine from 12% to zero, the complete tax will be excluded from the cost paid by the consumer. As per the example, if any treatment requires ₹1,00,000, including tax, then previously it was required to pay ₹1,12,000 due to 12% GST, but now after reduction, it is required to pay the same price of ₹1,00,000.

In simpler terms, consumers are saving the total amount of tax, which would be substantial for costly medicines like anti-cancer or other rare diseases. Patients require such treatments on a continuous basis, and hence, saving money will be quick for them.

Healthcare Gains from GST Cuts:

This can be attributed to the 56th meeting of the GST Council, chaired by the Union Finance Minister of India, Nirmala Sitharaman, which introduced significant changes to the Indian taxation system. Under the Next-Gen GST Reforms 2025, the Council has made a decision to simplify the existing tax regime to just two slabs and cut down taxes considerably in various industries.

One such industry that would benefit the most from this is that of healthcare, where GST has been lowered on drugs, diagnostic products, and medical devices.

Why Does This Matters?

The healthcare industry has frequently encountered problems of expensive out-of-pocket expenses for the patient. With the GST either reduced or removed from essential products, those affected by cancer, rare illnesses, or chronic illness treatment will greatly benefit through substantial savings.

On the other hand, reduced costs of diagnostic procedures, oxygen, surgery tools, and even medical supplies make preventive care affordable.

7 Pillars of Next Gen GST Reforms

Pillars of the Next-Gen GST Reforms 2025 include the seven important pillars which strive to simplify the process, bring down compliance costs, and create a user-friendly taxation system for the citizens and businesses. It represents the vision of the government to introduce an advanced and globally competitive GST structure.

1. Simple Rate Structure

The slab rates of the GST, consisting of four slabs, have been simplified to two slabs only – 5% and 18%. This not only makes the process of taxation easier but ensures that essential goods such as medicines and healthcare products remain affordable.

2. Focusing on the Essential Sectors

Healthcare, education, and insurance sectors have been prioritized by reducing tax on medicines, diagnostic tests, medical devices, and health insurance premiums.

3. Simpler Compliance Procedures

Some of the changes will involve simplified return filing process, quicker refunds, and fewer forms to be filed. Small companies, particularly those in the medtech and pharmaceutical industries, will receive 90 percent provision refunds under inverted duty structure.

4. Approach of Digital First

There have been efforts to digitize the registration, return filing process and compliance of GST. There have been user-friendly portals and real-time data validation.

5. Encouragement for Domestic Manufacturing

With reduced GST on medical devices, pharmaceuticals, and raw materials, the government has helped promote Make in India and increased the strength of supply chains in sectors such as health care and diagnostics.

6. Transparency and Accountability

There have been measures introduced to increase transaction monitoring, reduce tax fraud, and achieve parity between states. Such measures have resulted in greater business confidence in the GST system.

7. Competitiveness in the Global Marketplace

The GST of India has been brought up to the global best standards, which will make it easier for global firms to conduct business in India, but also improve the reputation of India as an open market.

Impact on Medical Devices, IVDs, and Equipment

• Reduced cost of treatment for patients: The treatment cost will become cheaper in hospitals and clinics because of reduction in the GST rate for oxygen concentrators, thermometers, and surgical instruments, which was earlier 12%-18%, now to 5%.

• Affordable diagnostics: There is a reduction in the rate of GST from 12% to 5% on diagnostic kits and reagents (HSN 3822). It means that there would be decreased cost of diagnostic testing of routine as well as specialised nature. The reforms are aimed to facilitate early diagnosis and prevention of the most widespread diseases like diabetes, TB, and cancer.

• Positive impact on IVD industry: Lower rate of GST and provisional refunds will improve cash flow, stimulate "Make in India" production, and thus increase the availability of devices for chronic patients like diabetics through the reduction in the cost of blood glucose monitoring systems (glucometers and strips) and other in vitro diagnostics.

• Help for domestic manufacturers: Many Indian medtech and IVD manufacturers are struggling with expensive inverted duty structures. Reforms in GST will reduce the problem.

• Promoting the adoption of advanced technology: Radiology and radiotherapy equipment, breathing apparatus, therapeutic machine, etc., which cost 18%, now is included into the 5% slab. It will contribute to increased adoption of advanced technology by Tier II and Tier III cities.

• Improved accessibility of basic supplies: Now the cost of basic items like bandages, gauze, sterile dressings, and surgical gloves will become less for the hospitals, and it will reduce their costs indirectly.

• Development of veterinary and dental practices: Veterinary and dental instruments, etc. are also included into the new 5% slab.

• Insurance premium exemption: Life and health insurance premiums are also exempted from GST.

Here’s a comprehensive overview of the revised GST rates for medicines, diagnostic tools, medical devices, and essential healthcare products.

Revised GST Rates on Medicines, Medical Devices & Healthcare Essentials (Effective 22 September 2025)

This indicates that the structure of the GST favours public interest and helps develop industries, thereby improving the international status of India. To understand the processes in more depth, see the FAQ page of the GST.

In addition to healthcare amendments, there have been modifications in GST rates of various other items like household items, consumer goods, industrial products, etc. The complete list is given below.

Conclusion

In particular, the recent GST changes made in 2025 showcase the dedication of the Indian Government to providing an affordable and accessible health care system through making medicine, diagnostics, and medical devices less costly to the consumers. Although this will result in reducing the cost of treatment, thus attracting more medical tourists, any companies willing to enter this market have to deal with a variety of regulatory and other issues related to the registration and import of their products.

It is here that Morulaa Company can prove to be really useful. Morulaa Company has extensive experience in India-specific regulatory matters, CDSCO registration, import licensing, and compliance for both medical devices and in-vitro diagnostics (IVDs). Thus, thanks to the help of Morulaa Company, any manufacturer or distributor of medical equipment will be able to enter the Indian market easily and quickly.