The AP government is estimating that the state’s health sector will save about Rs 1,000 crore with the GST 2.0 reforms. With the reduction in tax on life-saving drugs, the government will save Rs 716 crore on medicines and surgical supplies purchased directly by the public. Health Minister Satya Kumar revealed that the government’s expenditure will decrease by up to Rs 250 crore in purchases.
Based on the purchases made in 2024-25, it is estimated that the burden on public health will reduce by about Rs 1,000 crore. Until the 21st of last month, the GST on medicines was 12% and 5%, and 99% of medicines were in the 12% category. Now the Center has reduced it to five percent.
“That is, the tax has been reduced by up to 7 percent. The Center has completely removed the tax of up to 12% on 33 types of medicines in the rare category, including cancer. This has provided a huge relief to public health”, the minister said. There are about 35,000 drug stores and 5,000 wholesalers in the state. Through these, medicines and surgical supplies worth Rs 11,250 crore were sold in 2024-25.
The state Drug Control Administration Department said that the tax burden on the people was up to Rs 1,350 crore. Now, with the reduction in GST, the burden will be reduced by up to Rs 703 crore. Apart from this, the purchase of cancer and other rare medicines in the state is estimated to be up to Rs 112 crore. It is estimated that the victims will get relief of up to Rs 13 crore as the 12 percent tax on these has been completely removed.
The minister said that GST is included in the MRP prices finalized by these institutions. He said that pre-authorizations worth Rs 4,077 crore were given through the NTR Vaidya Seva Trust in 2024-25. He said that now up to Rs 2,308.56 crore will be saved. He said that there will be a surplus of up to Rs. 40 crore in the purchase of medicines and surgical items.
“We have purchased medicines, surgical items, implants, diagnostic kits, etc. through APMSIDC for Rs. 679 crore in 2024-25. Out of this, Rs. 71 crore was paid under GST. Due to GST 2.0, Rs. 40 crore out of this Rs. 71 crore will no longer need to be paid. If we look at this, we estimate that an average of Rs. 250 crore will be saved annually with the 2.0 reforms”, he explained.
