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Goods and service tax is a major factor which has a potential to cover the economic base of the country along with its sidelines also India is not just one of the biggest performing nations for generics however, additionally encountering a blast in remedial tourism which creates extra returns for the Healthcare Industry. India’s Pharmaceutical Industry as of now is 3rd largest as far as volume and 14th largest regarding esteem all-inclusive. As the populace is persistently developing, so is the requirement for good Healthcare Services, which brings the need for growing more qualified personnel to fill the present crevice in the part and giving state-of-the-workmanship offices and innovations to patients.

India is the largest producer of generics. The country’s Pharmaceutical Industry is currently the 3rd largest in the world in terms of volume and ranks 14th in terms of value. As the population continues to grow, the need for better Healthcare Services is also growing. Currently, 5 percent of the country’s GDP is spent on the Healthcare sector. 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 the levy of Taxes. In the service tax regime, the health care services were kept out of the 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 the ambulance, Blood Banks, treatment of clinical waste, etc. Also, we would like to discuss the taxability of other income of doctors in addition to income from practicing as a doctor. The GST impact on various issues is as under:

Center Reconsiders GST on COVID-19 Vaccine

Vaccine maker Bharat Biotech has set out the rate of his vaccine named COVAXIN at Rs 600 per dose to the state government and Rs 1200 per dose to the private hospitals. In between the high covid-19 vaccine rates the center is thinking of goods and services tax GST waiver to lessen the rates for state government and private hospitals.

Exemptions from GST under Healthcare Services

No GST shall be leviable in the following cases of health care services:

  • Health care services by
  • A clinical establishment,
  • An authorized medical practitioner, or
  • Paramedics

Exemptions from GST

  • Preservation of Stem cells by cord blood banks
  • Treatment or disposal of biomedical waste of clinical establishment by operators
  • Health care of animals or birds by Veterinary Clinic
  • Services by Rehabilitation professional by way of rehabilitation therapy or counseling

GST Rate on Hospital Room Rent

In the 47th GST council meeting, with effect from 18-07-2022, hospital room rent will be liable to Goods & Services Tax as follows:

1. ICU Beds- NIL rated

2. Non-ICUICU Beds-

a. Rent/day is up to INR 5,000 – NIL rated

b. Rent/ day is exceeding INR 5,000 – GST @ 5% (without ITC)

The GST Rates on numerous categories of medical amenities are given as below:

Tax Rate

Healthcare Commodities
0% Contraceptives, Human Blood
5% Medicines, Animal or Human Blood Vaccines
12% Ayurveda Medicines, Medicinal Grade Hydrogen Peroxide, Anesthetics, Potassium Iodate, Iodine, Steam, Glands, And Other Organs For Oregano-Therapeutic Uses, Ayurveda, Unani, Homoeopathic Siddha Or Biochemical Systems Medicaments, Sterile Suture
18% Tampons, Disinfectants

The healthcare industry has been hit by the GST tax rates and various other rules and regulations. But the goods and services tax has created a hazardous situation for the normal person who drifted under the fate. As the tax charges are geared up to a hefty number it seems that the GST has cursed the healthcare industry more than it has blessed.

The concept of aggregate turnover and registration:

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 a 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 are 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 has a hospital in Delhi, Haryana, and UP. He has shops also in these states which have 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 in these states as the threshold limit requiring registration has crossed

CONCLUSION:

Health Care Services is an important sector for an economy and providing exemptions from GST is in the wider interest of the public at large. Although the government has put the major portion of healthcare services under the exemptions list, still there are some essential medical equipment and devices that attract a high rate of GST, that need to be looked upon. Further, the 47th GST council meeting made the healthcare services costlier for the people thereby increasing their out-of-pocket medical expenditure by taxing the hospital room rent above 5000/ day @ 5%.

Although the meeting intends to tax the higher income individuals availing the medical services of luxurious rooms, one thing to note in this regard is that in metro cities, some hospital provides the basic room category starting from this price only. This will only increase the burden on the pocket of the Individuals.

About the Author

Ruchika Bhagat

The author is Ruchika Bhagat, FCA helping foreign companies in setting up and closure business in India and complying with various tax laws applicable to foreign companies while establishing a business in India. Neeraj Bhagat & Co. Chartered Accountants is a well-established Chartered Accountancy firm founded in the year 1997 with its head office at New Delhi.

Author Bio

Neeraj Bhagat & Co. is helping foreign companies in opening up of Liaison/ Branch Office in India and complying with various tax laws applicable to foreign companies while establishing a business in India. Neeraj Bhagat is the founder of Neeraj Bhagat & Co. Chartered Accountants, a Chartered View Full Profile

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