Union Finance Minister Nirmala Sitharaman announced on Monday that, following the 54th GST Council meeting, the GST on cancer drugs has been reduced from 12% to 5%. Additionally, the GST rates on namkeens and savoury food items have been prospectively lowered from 18% to 12%.
A Group of Ministers (GoM) has been established to review and recommend a reduction in GST rates for medical health insurance, with a report expected by the end of October.
The GST Council is also planning to form a GoM to evaluate the future of the compensation cess, which is set to expire after March 2026. Sitharaman explained that while the extended compensation CESS, used to repay back-to-back loans and their interest, will be collected until March 2026, it may end earlier if the loans and interest are cleared by January 2026.
The Council decided to create a new GoM for medical and health insurance, led by the Deputy Chief Minister of Bihar with additional members for this purpose. A decision on rate reductions will be made in November based on the GoM’s report.
To lower the cost of cancer treatment, the GST rate on cancer drugs such as Trastuzumab Deruxtecan, Osimertinib, and Durvalumab is being cut to 5%. The rate for namkeens and expanded savoury food items will be reduced to 12%, starting prospectively.
Additionally, the Council recommended exempting GST on research and development services provided by government entities. Funds given to government-affiliated universities and research centres, whether established by central or state laws, or those with income tax exemptions, will not be subject to GST.
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