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The Healthcare Sector is a largely unfocused area of the Budget. Over the last several years, about 1% of GDP has been allocated for healthcare, which is the lowest when compared with the rest of the countries of the world. As per the reports, 70% of the medical expenses are out of pocket expenses for an average Indian.

With the pandemic Covid-19 taking over the world and increasing awareness about the importance of healthcare, it wouldn’t be a surprise if there is an increase in the allocation of budget for healthcare. In December 2020, Union Finance Minister Nirmala Sitharaman had said in a statement that investment in health is going to be absolutely critical and would get top priority in Union Budget 2021, with the government looking into not just increasing health infrastructure but also human resources for health toward making lives safer and achieving a reduction in out of pocket health-related expenses. There also lies ahead the colossal task of vaccination for Covid-19.

Reduction of Duties and GST

The pharmaceutical sector is expecting more reduction in duties to reduce the cost of the medicines. Presently, GST on drugs is levied under four categories- nil, 5%, 12% and 18%. However, the majority of the drugs fall under the 12% category. A reduction in the rates of GST will significantly reduce the cost of medicines and make it more affordable.

Union Budget 2021   Expectations by the Healthcare Sector

Deduction for Research and Development

With focus on making the country Atmanirbhar Bharat, research and development in the healthcare sector is the need of the hour. In this light, the healthcare industry also seeks a 150% deduction in tax on in-house R&D.


Deduction under section 80D, 80DD and 80DDB

Deduction under section 80D, 80DD and 80DDB under Income Tax Act,1961 is provided in relation to healthcare.

1. Section 80D provides deduction for the medical insurance premium paid and preventive health check up.

2. Section 80DD provides deduction for expenses incurred in relation to treatment of a dependent person with disability.

3. Whereas, Section 80DDB provides deduction of expenses incurred in relation to treatment of specified disease.


An increase in the amount of deduction is also expected from the budget to promote awareness about the importance of healthcare.

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Category Union Budget, Other Articles by - Neethi V. Kannanth