Full coverage of GST in Healthcare Sector

Under the ambit of GST, healthcare services refer to any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. So it is one of the core services that is provided by the organizations for the well being of the people. It is one of the basic necessities needed for the overall development of the country.

Taxation of Education Sector under GST Regime

Healthcare sector thus has been exempted from GST as the government has accorded it as due importance that this sector needs to increase the rate of progress towards attaining the national goal of achieving health for all as per the Sustainable Development Goals, to which India is committed. This will contribute to the process of the transformation of India, its people and the economy. Following are the points to be noted for the GST in healthcare services-

• Health care services provided by a clinical establishment, an authorised medical practitioner or para-medics are exempt.
• Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not, are healthcare services which are exempt.
• The entire amount charged by them from the patients including the retention money and the fee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients is exempt.
• Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable.
• Services by a veterinary clinic in relation to health care of animals or birds are exempt from tax.
• Transportation of Patients in Ambulance is exempt from GST.

Healthcare industry of India not only includes the services rendered by hospitals, dispensaries and clinical establishments, but it also includes the drugs, medicines, healthcare commodities and other services that are ancillary to any other health care service provided, that are charged as per the following rates under GST-

Input Tax Credit (ITC) on Motor Vehicles

GST rates on Healthcare Commodities

• 0% – Contraceptives products, Human Blood
• 5% – Medicines, Animal or Human Blood Vaccines
• 12% – Ayurvedic Medicines, Medicinal Grade Hydrogen Peroxide, Anaesthetics, Potassium Iodate, Iodine, Steam, Glands And Other Organs For Organo-Therapeutic Uses, Ayurvedic, Unani, Homoeopathic Siddha Or Biochemical Systems Medicaments, Sterile Suture, pacemaker, heart valve, Surgical Item
• 18% – Tampons, Disinfectants, hospital beds, oxygen cylinder, consumables, Wheel Chair
• 28% Wing Scale, Hot Water Bag

Tax rate on Hospital Room Rents.

• Below Rs.7500 – 0%
• Above Rs. 7500 – 5%

The Goods and Service Tax has both negative and positive impact on the industry. The cost of life-saving treatments has increased under GST, thus directly impacting the budget of the common man. Even though it aims to make the tax system less complex and prompts business growth in this sector, the common individuals are not very happy with the increased burden of healthcare on their pockets. The increased GST rate on various medical equipment, supplies and services has resulted in a hike in the cost of general treatment. For example, a 18% GST on pacemaker has resulted in an increased in the cost heart treatments.

Check the GST calendar

Another impact was seen in the form of a hike in the cost of blood and related supplies. Earlier, there was no tax on blood bags, However, the introduction of GST has resulted in an increase in the cost by up to Rs 200 per unit of blood. There is also a 12% GST on the bags used to carry blood. But overall govt has  tried to make healthcare sector quite affordable to the common man by making the health care services exempt from tax.

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The author of above article is Tanuja Puri, Assistant Professor.

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