Culture of India

Duty exemption for medicines used to treat rare diseases

The Centre has exempted from basic customs tax all drugs and food imported for personal use for the treatment of rare diseases mentioned in the National Policy for Rare Diseases 2021.

What exactly are rare diseases?

  • Rare diseases are medical conditions that impact only a small proportion of the community.
  • A disease is deemed rare in India if it affects fewer than one in every 2,000 people.
  • These illnesses are frequently inherited and are chronic, degenerative, and potentially fatal.
  • Over 7,000 rare diseases are known, and it is believed that approximately 70 million individuals in India are affected by them.
  • Many of these diseases have no cure, and treatment can be costly and challenging to obtain.

Duty relief is required

  • This decision was made to assist patients and families bear the burden of treatment costs.
  • The drugs and food needed to treat these rare illnesses are frequently expensive and must be imported.
  • This exemption will result in significant expense savings and will provide much-needed relief to patients suffering from rare diseases.

Key medications covered by this clause

  • The central government has completely exempted Pembrolizumab (Keytruda), a cancer treatment drug, from fundamental customs tax.
  • Previously, the GST Council reduced the GST rate for Keytruda from 12% to 5% in a meeting in September 2021.
  • When imported for personal use, the life-saving drugs Zolgensma and Viltepso used to treat spinal muscular atrophy were excluded from GST.

What is the new tax exemption?

  • The Central Board of Indirect Taxes and Customs (CBIC) approved the exemption by substituting “Drugs, Medicines, or Food for Special Medical Purposes (FSMP)” for “drugs or medicines.”
  • To qualify for this exemption, the individual importer must present a certificate from the district medical officer/civil surgeon or the central or state head of health services.

How are life-saving pharmaceuticals taxed?

  • Drugs/medicines are usually subject to a 10% basic customs tax, with some categories of lifesaving drugs/vaccines subject to a 5% or nil rate.
  • The GST Council cut tax rates for several life-saving drugs at its meeting in September 2021.
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