A commentary on GST reforms and their effect on cancer care in India

The GST council in its 56 th meeting has recommended the total exemption of thirty-three life-saving drugs including those used in cancer care from GST altogether (erstwhile 12% to now zero and three critical drugs for rare diseases and cancer from 5% earlier to zero). 1 The council has also recommended no GST application on individual health and life insurance policies (from 18% previously). 1 An important aspect of this policy reform is that it includes certain patented drugs with no generic alternatives. A list of the pertinent drugs is provided in the . List of drugs with GST reduced to nil as part of the GST 2.0 reforms In another significant step, the council has also increased the tax slab for tobacco products to 40% which is the highest for any class of goods in the country. 1 Tobacco and products related to it shall however, remain under the 28% tax slab till such time as loans and compensation cess have been paid. 2 Regardless, the new taxation slab on health-harming products is a step in the right direction and provides increased opportunity to redirect the generated revenue for funding cancer care in the country. There is evidence in literature which supports the fact that tobacco taxation leads to improved health outcomes particularly in economically disadvantaged sections of society. 3 The benefits of such taxation include gain in life years, averting treatment costs and premature mortality as well as avoiding catastrophic expenditure on health and poverty. 3 There is however an acknowledged paucity of evidence for the benefits of health taxation in terms of alcohol and sugar-sweetened beverages. 3 Previous work has suggested policy reforms in the taxation regime. 3 A subnational study using the extended-cost effectiveness model on four Indian states found that a cigarette price hike of INR (Indian National Rupee) 10 with ad valorem of 10% (currently in four states of India led to 65,762 top-income and 485,725 bottom income bracket quitters for smoking thereby avoiding 665,000 mortalities, gaining 11.9 million years of life, over USD (United States Dollar) $1.96 trillion in averted treatment cost and saving over USD $762.5 million for AB-PMJAY (Ayushman Bharat Pradhan Mantri Jan Arogya Yojana) wherein the modelling factored only below poverty coverage of AB-PMJAY (India's universal health coverage scheme). 3 Recent literature suggests that a 50% hike in tobacco tax stands to avert 1.8 million mortalities while saving, over the span of a decade, INR 11.9 trillion. 4 Literature has acknowledged that affordability for cigarettes has either remained neutral or improved and that for smokeless tobacco has improved in India over a period of time and increasing the tax slab for these is a welcome step. 5 High-cost drugs set to become GST free (provided a complete pass-through fraction is realized) include Pegylated Liposomal Irinotecan, Asciminib (USD $2568.36 for 60 capsules), Polatuzumab (USD $2425.94 per injection), Alectinib (USD $5372.81: 224 capsule pack), Amivantamab (USD $950.10), Teclistamab (USD $4220.16 per 1.7mL injection), Daratumumab (USD $813.58 per 400mg infusion) and Atezolizumab (current cost with 12% GST: INR 396,725/ USD $4501.59 per 1200 mg vial) amongst others. The pricing is as per the Tata 1mg pharmacy portal accessed in September 2025. 6 For a single 1200 mg vial of Azetolizumab, assuming a complete pass-through fraction, the patient stands to save INR 42,506.25. For perspective, as per a People's Research on India's Consumer Economy (PRICE) report, destitutes earn less than INR 125,000 per annum per household, aspirers INR 125,000-500,000 and the middle-class INR 500,000-3,000,000. 7 All costs are current with 12% GST applicable and conversion rate current for September 2025. In fact, all other medicines and drugs have seen a slashed GST to 5% from the earlier 12%. 8,9 Economically, this tends to portend an 'inverted GST' structure wherein manufacturers might end up with greater input tax compared to that on the final product. The key starting materials and active pharmaceutical ingredients have had their 18% taxation remain unchanged which creates increased chances tax inversion despite a provisional refund to the tune of 90% income tax credit. This scenario may be mitigated as long as the processing of claims is smooth. 9 The key starting materials and active pharmaceutical ingredients have had their 18% taxation remain unchanged which creates increased chances tax inversion despite a provisional refund to the tune of 90% income tax credit. This will also ensure that manufacturers are able to pass on the benefits to consumers in a timely manner. From an industry perspective, the clear 5% slab across the board obviates ambiguity and enables clarity in marketing and transparency in pricing. This can aid in redirecting resources to research and innovation. GST has also been reduced on diagnostic and surgical equipment as well as medical supplies such as bandages and gauze.This appraisal of literature intends to provide an opinion on recent policy changes and their possible ramifications in healthcare for India. By this virtue, the data to form this opinion was derived from news sources albeit mainstream in case of private outlets and government outlets which officially notify the policy change. The obvious limitation is the dearth of original research data on the matter which will require time to be produced. Another limitation is that the realized pass-through fraction to the consumer will be reflected in time though government sources have urged industry to pass the complete benefits of the tax rationalization to the consumer.Overall, these economic policy changes should be regarded as steps in making cancer care more affordable, accessible as well as ones which promote health in society. The key takeaways from these reforms in terms of healthcare involve a simplified tax structure, removal of tax on drugs and medical equipment and increased taxation on tobacco products. There needs to be further research to have an accurate assessment of the predicted decrease in financial burden for cancer-afflicted households as well as the degree to which this will be blunted by universal health coverage under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). The aforementioned structural policy changes can also serve as a guidance for other countries in the region with similar socio-economic and disease burden characteristics which might benefit from adopting or adapting these measures in terms of policy layout, tax structure and outcome monitoring.