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Impact of GST on Healthcare Industry and Pharma Sector

The Indian Pharmaceutical industry is currently the largest producer of generics in the world and the 3rd largest when talking about volume. It accounts for almost 5% of the country’s GDP and is expected to touch 150 billion dollars, by the end of the year. Seeing this exponential growth, the impact of GST on the sector is going to be quite significant. Here’s taking a look at the impact of GST, on the Indian healthcare industry:

With the final GST rates being disclosed, here are the revised tax slab in various categories:

Revised Hospital Room Rent for Private Healthcare (Under GST Tax Slabs):

Hospital Room RentApplicable GST Rates
Below Rs.10000%
Rs.1000 to Rs.249912%
Rs.2500 to Rs.749918%
Above Rs.750028%

Revised Tax Rates on Healthcare Commodities:

Tax RateHealthcare Commodities
0%Contraceptives, Human Blood
5%Medicines, Animal or Human Blood Vaccines
12%Ayurvedic Medicines, Medicinal Grade Hydrogen Peroxide, Anaesthetics, Potassium Iodate, Iodine, Steam, Glands And Other Organs For Organo-Therapeutic Uses, Ayurvedic, Unani, Homoeopathic Siddha Or Biochemical Systems Medicaments, Sterile Suture
18%Tampons, Disinfectants

Private healthcare has now become much more expensive for the common man, creating a divide in healthcare for the underprivileged. Many important treatments/operations have seen an increase in slab-rate from 12 % to 28% post-GST and almost 80% of life-saving medicines will be more expensive now.

Here’s a look at various fields of healthcare and how GST will impact them:

 DepartmentSummary Pre-GST Post-GSTItems Getting Expensive

 Impact

NephrologyDialysis Under Heavy Tax5%12%Homo Dialysis Machine, Tubings, Dialysis Needles, Catheter, Plasma filter, Dialysis fluidCurrently, dialysis is charged at a rate of INR 1800 to 2200 which will be further increased by INR 300. According to this, those individuals who are getting dialysis treatment 10 to 12 times per month will be incurring an additional INR 40,000 as an annual burden.
Heart TreatmentPacemaker under 18 percent GST5.5%12% to 18%Lead valve of Pacemaker, Device (Heart failure machine CRT – ICD)Pacemaker worth 1.5 lakh will now cost 15-20 thousand extra. ICD will also cost an extra 40 thousand which comes at currently 3 lakh per machine.
Eyes TreatmentLens surged upto INR 500 while operations became 15 percent costlier9%12% to 18%Checkup machines, Indian lens INR 1200 to 3000 has surged INR 1500 to 3500. Foreign machines which used to cost at INR 5000 to 9000 currently they are hiked at INR 6000 to 10000.Lenses prices have hiked up to 12% from 9%, while many of the machines are attracting 28%. Along with the lenses, the operations cost has also increased up to 15 to 20%.
OrthopedicsSupport devices getting costlier, Implants neutral5%12% to 18%Disposable items, Bone cement, Operation equipment like drill machines and its batteries.Implant taxes are 5% but the supported items in operation are now under 7% to 28% tax rate. Finger coat, Kneecap, Brep belt also attract 12% now.
Cancer TreatmentsExcept for blood cancer treatments, every other treatment of cancer costs 12% extra5%7% to 12%All the imported medicines have become expensive. Advanced stage cancer patient will be incurring INR 10,000 extra on the treatment.

GST Benefits to the Pharmaceutical Sector:

Coming to the pharmaceutical sector, GST is set to benefit it majorly by streamlining the tax structure. Under the past tax regime, there were about eight indirect taxes levied on the Pharma industry. By subsuming all these taxes, GST will also help facilitate the streamlining of store network, which in itself can add 2% to the market measure of the industry. Furthermore, with the discontinuation of the CST (Central Sales Tax), GST will reduce the assembling costs, also enhancing operational effectiveness by merging warehousing methodology, for most companies.

Even though the cost of treatment has risen under GST, it will also help in diminishing complexities/obstacles associated with business growth. Also focusing on other sectors like medical tourism, GST promises development and expanded profitability. What are your thoughts on the impact of GST on the healthcare sector? And how does it further impact the common man? Tell us your views in the comments section below.

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