Internationally, GST was first introduced in France and now more than 160 countries have introduced GST. The Various countries have , depending upon their requirements and suitability  introduced National level GST or Dual GST.

The Government of India has introduced the Goods & Service Tax Act by making the Constitution  (101 Amendment) Act 2016 notified on 16 September 2016 to the constitution of  India. In India,  the government have introduced dual GST model.

The medical industry in India also witnessed major changes due to the introduction of GST . Many type of indirect taxes had been subsumed and one indirect tax(GST) was imposed. In some areas GST had been levied whereas some areas were given relief by way of giving exemption. The main intention for giving exemption  that common people of the country could not be adversely affected due to the introduction of GST.

In the present article we would like to throw light on major sectors of the medical industry due to the introduction of GST in the country. We can for the sake of convenience to understand the GST impact in this particular industry , divide the medical sector into the following mentioned branches :

(i) Outdoor Patient Services

(ii) Indoor Patient Services,

(iii) Blood Bank Services ,

(iv) Medical or Pathology Test Services,

(v) Medical Shops/Pharmacy Stores,

(vi) Bio Medical Waste Services

(vii) Consultation Services of the Medical Professionals

(viii)Veterinary Services

Goods And Service Tax Act provided exemption for Medical Sector

The GST  Act provides the exemption to the healthcare industry through notification no. 12/2017 Central Tax (Rate) , dated 28/06/2017 of the GST. The Entry regarding the health services exemption states that  “ Services by way of -:

(a) Health care services by a clinical establishment, an authorized medical practitioner or Para-medics;

(b) Services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above.

The above mentioned entry can be summarized as under:

Nature of Services Exempt

Type of Service Providers whose services are exempt

With the above discussions we can simply say that any thing done for the purposes of curing a patient will be exempt from the GST and not  otherwise.

Now we discuss the point wise effect of GST on various medical branches: 

GST on Outdoor Patient (OPD) Services :

 The out door patient service are primarily those services which are being given to the patient who came to the clinical establishment for the purposes of taking consultation services for  their treatment. As per the exemption notification no. 12/2017 (Central Tax Rate) dated 28.06.2017,  when such services are being given for curing the patient then it will be exempt.

GST on Indoor Patient (IPD) Services :

The Indoor Patient services are those services which are being given to the patients who are admitted to the clinical establishment for treatment , surgery etc and includes bundled services.  According to the provisions of the exemption notification no. 12/2017 (Central Tax Rate) dated 28.06.2017, any type of IPD service for the purpose of curing the patient will be exempt from the GST.

GST on Blood Bank Services:

The exemption entry w.r.t. GST on Blood bank Services given in notification no. 12/2017 Central Tax (Rate), dated 28/06/2017 of the GST states that:

“Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation.”

Thus all the services needed by Blood Bank for preservation of stem cells are exempt.

GST on Medical Tests (Pathology):

The medical or pathological test are being carried out for the purposes of diagnosis of the correct cause of the disease of the patients. Such type of tests becomes utmost necessary in many situations where the correct cause of the disease can not be ascertained from the apparent examination of the patients.  The Medical Test or Pathological Test (either done in own Clinical establishment or done in the separate clinical establishment setup specially for such test) are covered in the exemption entry under notification no. 12/2017 Central Tax (Rate), dated 28/06/2017 and are thus Exempt. 

GST on Medical Shops/Pharmacy Stores:

The pharmacy stores whether situated in the clinical establishment or otherwise are taxable under the provisions of the GST Act .But when such services is being offered as part of IPD (Indoor Patient Services) bundled services than such services are exempt from the GST. Further in a recent development Kerala’s Authority for Advance Rulings (AAR) has made it clear that supply of medicine through pharmacy to in-patients will not be levied Goods and Services Tax (GST) separately.

GST on Bio-Medical Waste Treatment :  

The Biomedical waste, also known as medical waste, is defined as solid waste generated during the diagnosis, testing, treatment, research or production of biological products for humans or animals. Biomedical waste includes syringes, live vaccines, laboratory samples, body parts, bodily fluids and waste, sharp needles, cultures and lancets. In medial industry the safe and timely disposal of  bio medical waste is utmost necessary .

The exemption entry w.r.t. GST on Bio- Medical Waste Treatment given in notification no. 12/2017 Central Tax (Rate), dated 28/06/2017 of the GST states that: 

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 when the services are provided by the Bio-Medical Waste Treatment operator to the clinical establishment for treatment of Bio-Medical Waste, NO GST will be levied on such services.

GST on Consultancy services by Medical Professionals:

Such services can be defined as  the consultancy services are being provided by the medical professionals for the purposes of treating a patient. Whenever such services are being given for the purpose of curing the patient and which according to the doctor is mandatory to the patient than it will be exempt form the GST.

GST on Veterinary Doctor Services: 

Veterinary medicine branch deals with the non-human animals. The veterinary services are those services which are given to the animals or birds especially domestic animals or birds .  According to the exemption entry under notification no. 12/2017 Central Tax (Rate), dated 28/06/2017,  all the services are exempt when provided for the purposes of curing the animals or birds and not otherwise.

The exemption entry w.r.t. Veterinary Services given in notification no. 12/2017 Central Tax (Rate), dated 28/06/2017 of the GST states that:

“Services by a veterinary clinic in relation to health care of animals or birds”

From the above discussion we can conclude that the any medical service for the purpose of curing the patient will exempt under the provisions of GST . The intention of the law for giving the exemption of medical services is to make the necessary treatment more affordable to the common people of the country. Furthermore any treatment service which according to the doctor is mandatory for patient such as plastic/ cosmetic surgery etc. is also exempt from the GST.

Disclaimer: The due care has been taken while preparing the above article . however users of this article are advised to refer original act, notification, circular, rules etc. before acting upon it. The author is not responsible for any type of loss occurred due to the above.

Author Bio

Qualification: CA in Practice
Company: NIKHIL KUMAR AND ASSOCIATES
Location: LUCKNOW, Uttar Pradesh, IN
Member Since: 13 Oct 2018 | Total Posts: 1

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7 responses to “Analysis of GST on Medical Sector  ”

  1. Sankar Majumdar says:

    What will be the taxability of Intra Ocular Lenses (IOL) which are fitted after a cataract surgery ? It can be treated as a bundled service because IOLs are generally not sold separately to a patient but used along with a cataract surgery. For undergoing a cataract surgery, a patient need not to be admitted in a hospital but at the same time it can not be treated as an outdoor service also.

    • nikhilca says:

      Dear Sankar Majumdar Ji
      As regards to ur query , In my opinion the Intra Occular Lenses(IOL) which are fitted after the cataract surgery is not taxable under GST as in most of the cases the same is sold as package or bundled service of cataract operation. You also mentioned rightly that the same is not sold to the patients otherwise than the cataract surgery. Further as regards the admission of the patient for cataract operation, my opinion is that admission is required in all the cases even for few hours as operation can not be made without admitting a patient into the clinical establishment. One may differ on this opinion. Regards…

  2. Rajesh Advani says:

    What about other services by blood bank except the services for preservation of stem cell? What about the services by bio medical waste operator to an authorised medical practioner or para medic? The loop holes also need to be mentioned clearly.

  3. Anand Tiwari says:

    Really very helpful n informative article.👍👍

  4. nikhilca says:

    Dear Prashant Jain Ji

    As regards to your query , If the professional charges received from pharma company relates to the healthcare services by a clinical establishment, an authorized medical practitioner or para medics; than it will be exempt otherwise it will be taxable.under GST provisions.

  5. prashant jain says:

    what about the professional charges received from a pharma company

    • nikhilca says:

      Dear Prashant Jain Ji

      As regards to your query , If the professional charges received from pharma company relates to the healthcare services by a clinical establishment, an authorized medical practitioner or para medics; than it will be exempt otherwise it will be taxable.under GST provisions.

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