New Delhi, Sep 3 : The reforms made in Goods and Services Tax (GST) by the GST Council, in its 56th meeting on Wednesday, will boost the affordability of life-saving drugs as well as address public health, pharma industry experts said.

In a landmark move, the GST Council, chaired by Finance Minister Nirmala Sitharaman, rationalised the indirect tax structure, cutting the current four slabs down to two -- scrapping the 12 per cent and 28 per cent rates, while retaining the 5 per cent and 18 per cent slabs.

As per the revision, life-saving drugs, health-related products, and some medical devices will see a rate cut from 12 per cent/18 per cent to 5 per cent or nil.

The changes in GST rates on services will be implemented from September 22.

"The Prime Minister's call for next-generation GST reforms is both timely and vital to stimulate growth. For the pharmaceutical sector, placing medicines in the 5 per cent slab will be crucial to ensuring affordability and addressing pressing public health concerns," Indian Pharmaceutical Alliance (IPA) Secretary General Sudarshan Jain said.

He noted that the pharma industry has also proposed alignment of GST on into an Active Pharmaceutical Ingredient (API), Key Starting Material (KSM) and other key inputs to 5 per cent.

"This will help prevent tax inversion, improve working capital, strengthen domestic manufacturing, and bolster India's position as the 'pharmacy of the world'," Jain said.

The Association of Indian Medical Device Industry (AiMeD) also "welcomed" the move by the government to slash GST rates 'from 12 per cent to 5 per cent".

"If refund on accumulated GST due to the inverted GST structure will be made within seven days, as being informed, we hope GST refunds will also be available on GST paid on Services and Capital Goods as is the case in other countries like Australia, Singapore and Canada etc to enable us to be globally competitive," AiMeD Forum Co-Ordinator, Rajiv Nath said.

"We also hope a transition period is provided to switch packaging material to avoid persecution for profiteering, though we intend to pass on the GST reduction to the end consumers by reducing MRP proportionately," he added.

Meanwhile, the government also reduced GST on individual health and life insurance premiums to nil (which currently stands at 18 per cent).

The Finance Minister said the move will make insurance more affordable for the common man and help expand coverage across the country.

With this change, all individual life insurance policies ' including term life, Unit Linked Insurance Plan (ULIPs) and endowment plans ' as well as their reinsurance, will now fall under the nil GST category.

The exemption also extends to all individual health insurance policies, including family floater and senior citizen plans, along with their reinsurance.

/IANS