18% GST on health insurance, 12% on cancer drugs but only 5% on dining out; entrepreneur questions logic behind GST slabs

The Goods and Services Tax (GST) structure in India has once again come under scrutiny, with people expressing their displeasure over its fairness and priorities. Aman Goel, co-founder and CEO of Grey Labs AI, recently expressed his concerns on social media, fuelling the debate.

A tale of two bills: Food vs health insurance

Goel, in his post, explained how GST changed his expectations. At a fine dining restaurant named Chef’s Tasting Menu, where he went to have dinner with his wife, he expected 18% tax on the price of ₹2,900 per person. But he was “pleasantly surprised” to see only 5% GST in the bill.

In contrast, when he renewed his parents’ health insurance, the situation was different. Being senior citizens, the insurance premium was high, and the 18% GST on it brought the tax amount to ₹25,000. He wrote, “How unfortunate that fine dining is taxed less but essential services like health insurance are taxed more. This is outright tax exploitation.”

12% tax on cancer medicines: Right to live?

Goel cited the example of an additional tax of ₹24,000 on life-saving cancer drugs while referring to the 12% GST. “By god’s grace I can afford it, but what about those who cannot afford the medicine because of this additional tax? Should they be allowed to die just because the government wants to tax them so heavily?”

Wide debate on GST rates

Goel’s post gave rise to a wide debate on social media. A user Mohit Ambani pointed out that the 5% GST on fine dining is because restaurants cannot claim input tax credit (ITC). To this, Goel responded that the gain or loss from GST should not ultimately be the consumer’s problem, as they are the ones who bear the tax burden.

Another user raised the issue of 18% GST on higher education. Goel responded, “There should be 0% tax on education. It is a basic human right.”

Here’s what Goel wrote on his social media handles:

Getting government’s attention

Concerns over GST on healthcare services are not new. In July, Union Road Transport and Highways Minister Nitin Gadkari had requested Finance Minister Nirmala Sitharaman to reconsider the 18% GST on life and medical insurance premiums. In response to a complaint by the Nagpur Divisional Life Insurance Corporation Employees Union, Gadkari had said that the tax burden on these essential services is unfair.

Questions over priorities

The GST framework, designed to be a unified tax system, has often faced criticism for its inequities. Essentials such as health insurance and cancer drugs are taxed higher, while luxury expenses such as fine dining are taxed less. Goel’s post has highlighted this inequality and fuelled calls for a more equitable system.

Conclusion

As the debate progresses, Goel’s question remains at the centre of the discussion:
“Who is deciding these tax slabs?” and “Why so much burden on essential services, while so much exemption is given to luxuries?”
The answers are yet to be found.