Why the GST council needs a disability policy, not just rate cuts

A GST exemption intended to offset costs related to disability cannot reasonably depend on an assessment score.

India’s Goods and Services Tax (GST) framework treats disability as a matter of degree rather than as a legal status. This approach has major financial consequences that have largely been overlooked. On August 3, 2026, the finance ministry informed the Lok Sabha, in response to Unstarred Question No. 2394, that GST collections for disability-related services and products are not categorised separately. Unless the government tracks collections from persons with disabilities, it cannot demonstrate that its exemptions serve their intended purpose. This issue is not incidental. It reflects a deeper problem in how GST law defines disability for tax purposes, highlighting the need for reform.

On August 4, 2026, a Supreme Court bench of Justices Pardiwala and Viswanathan directed the Centre to appoint a Chief Commissioner under Section 74. This post has only been held in additional charge since 2019. (HT Archive)

What the current rules say: Under Notification No. 12/2017-Central Tax (Rate), the GST exemption for health care-linked charitable services applies only when the beneficiary has a disability of 80% or more. For autism, severity is assessed using the Indian Scale for Assessment of Autism, and only a score meeting that threshold qualifies. Families with a valid certificate under the RPwD Act, 2016, pay regular GST on therapy below this cut-off. Assistive devices are treated no differently. At its 56th meeting on September 3, 2025, the GST Council reduced the rate on prosthetic and orthopaedic appliances from 12% to 5%. This was a reduction rather than an exemption, while hearing aids remain exempt. Three products, three types of disabled persons, three unrelated outcomes.

A constitutional question, not just a policy complaint: Article 14 allows for different treatment only when the classification has a clear basis that relates to the law’s objective, as set out by the Supreme Court in Anwar Ali Sarkar (1952). A GST exemption intended to offset costs related to disability cannot reasonably depend on an assessment score. Care costs do not disappear the moment a score falls short of a threshold. The RPwD Act sets a stricter standard: Section 3(3) prohibits disability-based discrimination unless the treatment is a suitable means to a legitimate aim, and a severity cut-off unrelated to actual cost is hard to justify as appropriate. Section 24(1) requires disability assistance to exceed similar general schemes by 25%, indicating that Parliament recognizes the need for relief to reflect real costs, not just administrative convenience.

What comparable jurisdictions do differently: The United Kingdom’s VAT Act 1994, Schedule 8, Group 12, allows zero-rating for goods designed specifically for disabled use based on a functional test, rather than a percentage threshold. Tribunal decisions, such as Nimbus v HMRC (2026), illustrate a working method for resolving borderline claims. In the United States, Section 529A links ABLE account tax benefits to age of onset, not severity, and Congress expanded that window to 46 years starting January 1, 2026. Australia goes further; under Section 38-38 of its GST Act, support is GST-free if provided under an approved National Disability Insurance Scheme plan, with eligibility based on functional need instead of a specific impairment percentage. Canada’s Excise Tax Act, Schedule VI, Part II, zero-rates devices “specially designed for use by an individual with a disability,” certified by prescription rather than severity score. All four systems focus tax treatment on functional impact, not a single cut-off, and depend on institutions set up to settle disputes instead of temporary parliamentary solutions.

The enforcement gap: On August 4, 2026, a Supreme Court bench of Justices Pardiwala and Viswanathan directed the Centre to appoint a Chief Commissioner under Section 74. This post has only been held in additional charge since 2019. The court also ordered ten states to appoint independent state Commissioners under Section 79 within four weeks. These authorities, empowered under Sections 75 and 80, are responsible for reviewing whether existing law aligns with the RPwD Act. However, they had no chance to examine GST notifications because the posts remained vacant.

What follows: The GST Council should replace the severity-percentage requirement with a criterion based on functional impact tied to certified benchmark disability status, the same status used for benefits under Sections 32 and 34. The finance ministry should separate GST collection data on disability-linked goods and services. A policy that cannot be measured cannot be justified. The newly appointed Commissioners should be given a clear mandate under Section 75 to assess fiscal measures, not just accessibility infrastructure. None of this requires new legislation, it simply needs applying the standard Parliament has already established in Section 3(3) to a tax schedule that has so far avoided scrutiny.

Akshat Puhania is a final-year law student at National Law University, Delhi. The views expressed are personal

(This is a Hindustan Times digital exclusive)