Understand the GST implications on dermatology services. While clinical procedures fall under the exemption, cosmetic/aesthetic procedures and the sale of medicines are taxable. Learn about the threshold for GST registration and the considerations for dermatologists providing both clinical and aesthetic services.

Health care is the basic need of citizens therefore Government has exempted health care services from GST burden through Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017 –  “Healthcare Services by a Clinical Establishment or Authorized Medical Practitioner or Para medics are exempt from Goods and services tax”. Clinical establishment and health care services has been defined in the notification as below

(s) “clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases;

(zg) “health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized 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;

Does the above cover dermatology from GST exemption, lets understand:

Dermatology is the branch of medicine dealing with the skin. It is a speciality with both medical and surgical aspects. A dermatologist is a specialist medical doctor who manages diseases related to skin, hair, nails, and some cosmetic problems.

Dermatology includes 2 aspects 1) Clinical 2) Costmetic/aesthetic procedures

Clinical procedures are exempt from GST since it falls under healthcare services however Costmetic/aesthetic procedures are taxable services under GST law as it is specifically excluded from exemption in the Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017.

Now, if a Doctor is providing both of these services, is it taxable or not taxable? As we know, the exemption limit for GST registration is Rs. 20 lakhs but this threshold limit is arrived after considering both taxable and exempt services. As per section 2(6) of CGST Act, 2017 ‘aggregate turnover’ means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number, to be computed on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and cess.

In this situation, revenue of both clinical and cosmetic services if exceeds 20 lakh rupees then GST registration has to be taken. Even if the clinical services is minimum but still registration is compulsory since overall revenue has exceeded the threshold limit.

Further if the clinic or doctor sells medicine along with treatment? Is this taxable or can it be called composite service?

Department is of the view and the same is reflected in some of the AAR’s and in other cases has ruled that medicine purchased by inpatients is exempt whereas medicine purchased from outpatients is taxable. Taking the same view, the medicine sold by clinics along with its treatment is taxable.

Therefore, if a clinical establishment or a practicing Dermatologist providing clinical and aesthetic services and also selling medicines to its clients and if crosses the threshold limit needs to get registered under GST as per my personal view.

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February 2024