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taxguru.in/goods-and-service-tax/taxability-health-care-services-gst.html
DEEPAKJ
Most healthcare expenses are paid out of pocket by patients and their families, rather than
by the Government. However, the Government of India has slightly minimized the burden
on medical expenditure by way of exempting such expenses from levy of Taxes.
In the service tax regime, the health care services were kept out of preview of Service Tax.
Now the same has been exempted in the GST regime. But what is the meaning of health
care services on which exemption is granted, we have to understand the nature of services
presently exempt under GST. The point of discussion on GST on health care services will be
incomplete if we do not talk in totality on health care services i.e. taxability of consultation
fees of doctors, Room rent in Hospital, Medicines, Medical and clinical tests, Services of
ambulance, Blood Banks, treatment of clinical waste etc. Also, we would like to discuss
about the taxability of other income of doctors in addition to income from practicing as a
doctor. The GST impact on various issues are as under:
Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017 has exempted health
care services vide entry no 77 which is reproduced as under :
For understanding the exemption, we need to understand below important terms used in
the said notification. These terms are also defined/clarified in the explanations given in the
notification as:
2. Clinical establishment
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3. Authorized Medical Practitioner
4. Paramedics
The said notification defines Health Care services as any service by way of
> illness,
> injury,
> deformity,
> abnormality or
> pregnancy
> cosmetic or
Thus, all treatments excluding cosmetic treatments have been covered by this definition.
As per Oxford Dictionary, Health Care means the maintenance and improvement of
physical and mental Health, especially through the provision of medical services.
2. Clinical establishment
a hospital, nursing home, clinic, sanatorium or any other institution by, whatever
name called,
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> that offers services or facilities requiring diagnosis or treatment or care for illness, injury,
deformity, abnormality or pregnancy
Section 2(e) of the Clinical Establishments (Registration and Regulation) Rules, 2010 defines
clinical establishment as:
(i) a hospital, maternity home, nursing home, dispensary, clinic, sanatorium or an institution
by whatever name called that offers services, facilities requiring diagnosis, treatment or care
for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicine
established and administered or maintained by any person or body of persons, whether
incorporated or not; or
But does not include the clinical establishments owned, controlled or managed by the
Armed Forces constituted under the Army Act, 1950, the Air Force Act, 1950 and the Navy
Act, 1957.
♦ Hospital: As per WHO, hospital means – Health care institutions that have an organized
medical and other professional staff, and inpatient facilities, and deliver medical, nursing
and related services 24 X 7 hours. Hospitals offer a varying range of acute, convalescent and
terminal care using diagnostic and curative services in response to acute and chronic
conditions arising from diseases as well as injuries and genetic anomalies.
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♦ Maternity Home:Means any premises used or intended to be used for reception of
pregnant women or of women in labour or immediately after child birth
♦ Nursing home : Means any premises used or intended to be used for reception of
persons suffering from any sickness, injury or infirmity and providing of treatment and
nursing for them and include a maternity home. A nursing home is a small private
establishment providing healthcare services with accommodation.
A Medical Practitioner registered with any of the councils of the recognized system of
medicines established or recognized by law in India and includes a medical professional
having the requisite qualification to practice in any recognized system of medicines in India
as per any law for the time being in force. The definition of authorized medical professional
brings out the following prerequisites:
(i) Allopathic
(ii) Ayurveda
(iii) Siddha,
(iv) Unani,
(v) Homeopathy
(vi) Yoga
(vii) Naturopathy
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Accordingly, qualified doctors holding recognized degrees in any of the above systems are
covered in this entry if they are registered with their respective medical councils.
To sum up, any person as an individual or as part of clinic or hospital giving any kind of
medical treatment through a duly qualified doctor empaneled with a recognized medical
council, excluding hair transplant or cosmetic surgery is exempted from payment of GST.
This entry exempts services in relation to health of animals and birds from GST. This entry
does not have any prerequisite with regard to qualification, recognition or affiliation.
Cord Blood Banks include other Blood Banks and thus the services provided by Cord/Other
Blood Bank for preservation of stem cells or any other services for such preservation are
covered in Entry No: 76 and are thus Exempt from GST.
Providing of ambulance services are also exempt from the ambit of GST.
Medical Test (either done in own Clinical establishment or done in the separate clinical
establishment setup specially for such test) are covered in Entry No 77 and are thus Exempt.
any GST.
This entry excludes unconditionally, services provided by operators of the common bio-
medical waste treatment facility to a clinical establishment by way of treatment or disposal
of bio-medical waste or the processes incidental thereto. Thus, services provided to
hospitals by way of treatment and disposal of bio medical waste is not taxable under GST
under the strength of this entry
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> Room rent for patient (Entry No 77 ) :
Rent charged for rooms for patients are not taxable under GST. However, if the hospital is
renting space for a chemist shop or providing rooms on rent for care takers, then that
would attract GST.
Medicines are taxable under GST. Although most of the medicines are taxed at 5% under
GST laws but few are also taxed at 12% and some at 18%. We need to identify the HSN of
the medicines / consumables / injectables and implants to ascertain the rate of tax
applicable to them. If medicines etc. are purchased for resale then ITC is available and sale
would attract tax.
We shall also discuss about the other income of doctors in addition to the income from the
medical profession and also discuss about the necessity of the registration in GST.
A person (Under GST) is identified through his PAN. The need of taking registration arises
when his aggregate turnover exceeds Rs 20 lakh per annum (Except in special category
states where the limit is Rs 10 Lakh). The aggregate turnover means sum total of all outward
supplies of goods or services or both made by a PAN entity anywhere in India. This includes
all taxable, tax free and exempted supplies. A person whose total outward supplies is
exempt or not taxable is not required to register. But where even a small part of services
provided or goods sold are taxable, he is required to get registered. Also, registration is
required to be taken in all states from where the business is carried out.
Example: A person having hospital in Delhi, Haryana and UP. He has shops also in these
states which has been given on rent. His turnover from the hospital and rental income from
the shops crosses the limit of Rs 20 lacs in a year. He has to take registration on these states
as the threshold limit requiring registration has crossed.
Any hospital, clinic or doctor required to be registered on account of its aggregate turnover
containing any component of taxable supply will be covered under provisions of reverse
charge. Reverse charge can broadly be classified in three categories. Specified services
under section 9(3), Inward supply received from unregistered person of taxable goods or
services or both under section 9(4) and certain imports. ITC on tax paid on reverse charge is
available but subject to restrictions and negative list inbuilt in the act.
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GST Rate for Medical, Hospital and Doctor Services
GST rate for goods and services is based on HSN/SAC code. GST rate for services fall under
5%, 12%, 18% or 28% slab. In this article, we look at the GST rate for medical services,
hospitals and doctors in detail. Majority of the medical, hospital and doctor services are
exempt from GST. Health care services by a clinical establishment, an authorized medical
practitioner or para-medics is exempt from GST. Services by a veterinary clinic in relation to
health care of animals or birds is also exempt from GST. Some of the above services not
rendered by a clinical establishment or an authorized medical practitioner or a para-medics
could be subject to GST.
SAC code for hospital, doctor and medical services fall under two categories of the SAC
headings. Majority of the hospital and doctor services fall under human health and social
care services. On the other hand, veterinary services fall under other professional, technical
and business services.
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SOCIAL CARE SERVICES
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999359 Other social services without accommodation 9% 9% 18%
The general rate of medicines etc, inter alia is covered under the following classification:
30 Drugs or medicines including their salts and esters & 2.5% 2.5% 5%
diagnostic test kits, specified in list 1. or or or
6% 6% 12%
9804 Dutiable drugs and medicines (imported by post or air) 2.5% 2.5% 5%
including their salts and esters and diagnostic test kits
specified in list 1, given at chapter 30, and Formulations
specified in list 2 given in chapter 30, intended for personal
use.
9804 Other Dutiable drugs and medicines intended for personal 6% 6% 12%
use.
The Government has also taxed implants such as artificial limbs which is a necessary and
integral part of health care services in relation to loss of limbs. Such artificial limb is
recommended as a post health care to restore life or to at least provide a workable living
means so that one is not left to miseries.
a. Coronary stents and coronary stent systems for use with cardiac catheters.
b. Artificial kidney
• Crutches;
• Wheel chairs;
• Walking frames;
• Tricycles;
• Braillers; and
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• Artificial limbs
Surprisingly, all their items have been taxed but deserve to have been exempt fully. As these
are not luxury or cosmetic in nature.
CONCLUSION:
Health care being important and many times life saving, most of the health care services are
exempt from GST. However, the Medicines, Consumables, and provision of services by
plastic surgeons (when cosmetic in nature) are not exempt. The artificial limb which is
essential for restoration of life and implants as mentioned above are also taxable.
Therefore, we can say that medical services are mostly exempt but not fully exempt.
Author Bio
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