Meaning of Clinical Establishment: As per Notification No. 12/2017-CT(Rate) dated 28th June, 2017 Para 2(s) of the CGST Act, 2017, ‘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.
Meaning of Health Care Services: As per Notification No. 12/2017-CT(Rate) dated.28.6.2017, Para2(zg) of the CGST Act, 2017, “ 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 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. The definition begins with the term “Means” which implies that only those services which are stated in the definition would be considered as healthcare services. Healthcare services means and includes:
(iv) Abnormality, or
(vi) In any recognized system of medicines in India.
Services by way of transportation of the patient to and from a clinical establishment . Thus, ambulance services to hospital and from hospital, both are exempt.
Meaning of “Authorized Medical Practitioner”: As per Notification 12/2017-CT(Rate), dated.28.6.2017, Para2(k) of the CGST Act, 2017 Authorized Medical Practitioner” means 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.
(ii) Nursing Home,
(iv) Sanatorium, or
(v) Any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for:-
(iv) Abnormality, or
in any recognized system of medicines in India, or a place establishment to carry out diagnostic or investigative services of diseases.
Meaning of ‘Para-Medical” in entry No.74 of exemption Notification: Paramedics are trained health care professionals like “ nursing staff, physiotherapists, technicians, lab assistants etc., They are accountable for their services when provided independently. Services by them in a clinical establishment would generally be in the capacity of employee and not provided in independent capacity an thus, will be considered as services by such clinical establishment.
Similarly, services of assisting an authorized medical professional would be considered as services by such authorized medical professional only. Services provided by paramedics in their professional capacities to the clinical establishment to authorized medical professionals are also exempted under GST Law.
Meaning of “recognized system of medicines”: As per “Clinical Establishment Act” the definition of ‘Clinical Establishment” and “ Authorized Medical Practitioner” comes under Recognized system of medicines. In terms of the clause (h) of Section 2 of the Clinical Establishment Act, 2010 the following systems of medicine are recognized systems of medicine:
(vii) Any other system of medicine that may be recognized by the Central Government.
Therefore, the above specified services have been recognized and when provided either in a clinical establishment or by an authorized medical practitioner or para-medics, these are exempt from the GST Tax.
Services provided by cord banks: Services provided by the cord blood banks by way of preservation of stem cells or any other service in relation to such preservation are exempt vide entry no.73 of the exemption notification no.12/2017 –CT(Rate)date.28th June, 2017. As per D. O. F. No. 334/03/2014-TRU dated.17.02.2017, This would cover services provided by cord blood banks, such as collection of umbilical cord blood, processing the same for segregation f stem cells, testing and cryo-preservation of stem cells.
Sharing of infrastructure by hospitals with doctors: As per Circular No.32/06/2018-GST dated.12th Feb, 2018 that Services provided by doctors/consultants/technicians hired by the hospitals, whether employees or not, are healthcare services which are exempt. Further, the entire amount charged by them from the patients including retention money and the fee/payments made to the doctors etc., s towards the healthcare services provided by the hospitals to the patients and is exempt. The Delhi CESAT held in the case of Ganga Ram Hospital’s case that “ hospital provided space to the doctors with required facilities to attend to the patients coming to the hospitals. These doctors, engaged on contract basis, were paid professional fee in terms of the contract.. For such services amount was collected by the hospital from the patients and shared with the doctors.
In Ganga Ram Hospital’s case in the present arrangements with the hospitals, there was no taxability and there is no legal justification to tax the share of the hospital on the ground that they have supported the profession of doctors by providing infrastructure. The service provided by the Hospital to the patients would be classified under Health Care Services.
Hospital managed by Charitable trusts: As per Notification No.2/2017-CT(Rate), Entry No74 (applicable to all persons including charitable trusts) exempts healthcare services at clinical establishment an authorized medical professional or paramedics. If charitable trust runs a hospital and appoints specialist doctors, nurses and provides medical services to the patients at a concessional rate, such services are not liable to GST Tax under CGST Act, 2017.
Composite healthcare services:
Many times doctors such as Homeopathy and Ayurveda doctors give medicines along with prescription. Likewise, paediatrician may also give vaccine injection to child and charge composite fee or a doctor may apply bandage in case of small injury. In all theses, composite fee is charged for consultancy as well as medicine. Nevertheless, the principal supply is healthcare service.
As per Section 2(30) of CGST Act, 2017, defines “ Composite supply” as supply consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Healthcare service is exempt from GST Tax .Whereas supply of medicines is taxable.
The GST Council, in its meeting dated 18th January, 2018, has clarified that foods supplied to the in-patients y the hospitals, as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Thus, composite supply may comprise exempt supply, besides the taxable supply.
Doctor providing other services, services such as renting of immovable property, etc., : Only healthcare services provided by the doctor are exempt. If doctor is providing any other taxable service, such as renting of commercial property, it is taxable.
Example: (1).A doctor is providing healthcare services for Rs.50Lakhs and he has rental income from residential dwelling of Rs.6 Lakhs, he is not liable for registration since both the receipts are exempt.
(2). The same property is used by the tenant for commercial purposes (i.e. renting medical shop) then the doctor would be liable to take registration under GST since his aggregate turnover exceeds Rs.20 Lakhs. Aggregate turnover for the purpose of registration in GST, includes taxable as well as exempt services. Nevertheless, he would pay GST only in respect of rent from commercial property.
(3). Further, his medical income is less than Rs.15 Lakhs but he receives rent of Rs.3 Lakhs from a commercial property located in other State, in such case he would not be liable for registration since aggregate turnover does not exceed threshold limit. As per Notification No.10/2017-IT dated.13.10.2017, if the aggregate turnover of any person on all India Basis is less than Rs.20 /10 Lakhs, he is not liable to take registration even if he is making inter-State supply of Taxable Services.
Hospitals: So far as healthcare services are concerned, these are exempt under GST. But where the hospital provides bundle of services, when may or may not be naturally bundled, then the question and debate arises, whether the supply of medicines, food and accommodation along with healthcare services would be subject to GST. Therefore, for the purpose of discussion, hospital activities may broadly be divided into three categories, namely:
(i) Where the medicines are sold through a separate chemist shop owned by the hospital,
(ii) Where the value of medicines is separately charged in the invoice raised by the hospital to the patient,
(iii) Composite fee (package) is charged for medicines, treatment, doctors’ fee room charges, food etc, . This category might include implantation of stents in hearts or by-pass heart surgery or even applying bandage on minor injury.
In respect of medicines supplied by the chemist shop under the first category, there is no doubt that supply of medicine would be subjected to GST, as supply of goods at the applicable rate of GST.
In respect of second category, where the hospital itself has divided the contract into two parts. Supply of healthcare services, and supply of medicines, then supply of medicines would be subject to GST, unless intention between the parties to enter into a single and composite contract is apparent.
In respect of third category, The dominant intention is to obtain healthcare services. In the VAT regime, the courts were divided whether VAT could be levied on supply of medicines and food in the composite package of healthcare service.
Radiologist: Taking of X –ray photographs is nothing but rendering professional services and does not involve any element of sale. It is not a commodity can be sold by the radiologist to the patient. In the GST, it would be treated as composite supply, whether healthcare services is principle supply.
Room Rent Charged by the Hospital: Rent on rooms provided to in-patients in hospitals is exempts as per Circular No.27/01/2018-GST, dated.4th Jan, 2018.
Ambulance service by State Government and Private Service Providers: As per circular No.51/28/2018-GST dated. 31st July, 2018 (Extracts), functions of “Health and sanitation” is entrusted to Panchayats under Article 243G of the Constitution of India read with Eleventh Schedule . Function of PUBLIC HEALTH is entrusted to Municipalities under Article 243W of the Constitution read with Twelfth Schedule to the Constitution. Thus ambulance services are an activity in relation to the functions entrusted to Panchayats and Municipalities under Articles 243G and 243W of the Constitution.
Services provided by Government and Private Service Providers by way of transportation of patients in an ambulance is applicable for the purpose of GST also, as the said services are specifically exempt under notification No.12/2017-CTR dated 28th June, 2017 vide S.No.74. As regards the service provided by PSPs to the State Government by way of transportation of patients on behalf of the State Governments against consideration in the for of fee or otherwise charged from the State Government, it is clarified that the same would be exempt under:-
(1) No.3 of Notification No.12/2017-CTR dated 28th June, 2017, if it is a pure service and not a composite supply involving supply of any goods, and
(2) No.3A of Notification No.12/2017-CTR dated 28th June, 2017, if it is a composite supply of goods and services in which the value of supply of goods constitute not more than 25% of the value of the said composite supply.
Meaning of Social Care Services: These following social care services, unless provided by the clinical establishment or entity registered under Section 12 AA of the Income Tax Act, 1961 by way of specified charitable activities are taxable @18%.
|Description of the services||SAC Code under GST|
|Residential care services for the elderly ad persons with disabilities other than by hospitals.||99932|
|Residential care services for children suffering from mental retardation, mental health illnesses or substance abuse.||99933|
|Other social services with accommodation for children|
|Residential care services for adults suffering from mental retardation, mental health illnesses or substance abuse.|
|Other social services with accommodation for adults.|
|Vocational rehabilitation services||99934|
|Other social services without accommodation for the elderly and disabled nowhere else classified|
|Child day care services||99935|
Classification of services of Medical, Healthcare and Social Care services under GST:
1. Veterinary services for pet animals: This service includes animal and veterinary hospital medical, surgical and dental services to pet animals. The services are aimed at curing, restoring, and /or maintaining the health of the animal, hospital Laboratory and technical services for pet animals provision of dietary recommendations for pert animals. The Service Accounting Code of this services is 998351 as per GST Law, 2017.
2. Veterinary Services for livestock: This services includes animal and veterinary hospital and non-hospital medical, surgical and dental services delivered to livestock. The services are aimed at curing, restoring and / or maintaining the health of the animal, hospital, Laboratory and technical services for livestock provisions of dietary recommendations for livestock. The Service Accounting Code of this services is 998352 as per GST Law, 2017.
3. Other veterinary services: This services includes animal and veterinary hospital and non-hospital medical, surgical and dental services delivered to animals other than pets or livestock (including zoo animals and animals raised for their fur productions or other products). The services are aimed at curing, restoring and / or maintaining the health of the animal, hospital, Laboratory and technical services for animals other than pets or livestock provisions of dietary recommendations for animals other than pets or live stocks. The Service Accounting Code of this services is 998359 as per GST Law, 2017.
4. Human health services: Inpatient Services: This services includes :-
(1) Surgical services delivered under the direction of medical doctors to inpatients, aimed at curing, restoring and/or maintaining the health of a patient,
(2) Gynecological and obstetrical services delivered under the direction of medical doctors to inpatients, aimed at curing, restoring and / or maintaining the health of a patient,
(3) Psychiatric services delivered under the direction of medical doctors to inpatients, aimed at curing, restoring ad / or maintaining the health of a patient,
Other hospital services delivered under the direction of medical doctors to inpatients, curing, restoring and / or maintaining the health of a patient, These services comprise medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services, including radiological and anaesthesiological services etc., The Service Accounting Code of this services is 999311 as per GST Law, 2017.
5. Medical and dental services: These following services are considering Medical and Dental Services as per GST Law, 2017:
(1) General medical services consisting of the prevention, diagnosis and treatment by doctors of medicine of physical and / or mental diseases, such as
(ii) Physical check-ups, etc.,
The above services are not limited to specific or particular conditions, diseases or anatomical regions. They can be provided in general practitioners’ practices and also delivered by outpatient clinics at home, in firms, schools etc., or by phone. Internet or other means.
(2) Consultation services in pediatrics, gynecology-obstetrics, neurology and psychiatry and various medical services,
(3) Surgical consultation services,
(4) Treatment services in outpatients clinics, such as dialysis, chemotherapy, insulin therapy, respiratory treatment, radiation treatment and
(5) Analysis and interpretation of medical images (X-ray, electrocardiograms endoscopies etc., These services can be provided in specialized practitioners practices and also delivered by outpatient clinics at homes, in firms, school etc., or by phone, Internet or other means,
(6) Orthodontic services i.e. treatment of protruding teeth, cross bite overbite, etc, including dental surgery eve when given in hospitals to inpatients,
(7) Services in the filed of oral surgery,
(8) Other specialized dental services i.e. in the field of periodontics, paedodontics, endodontics and reconstruction,
Diagnosis and treatment services of diseases affecting the patient or aberrations in the cavity of the mouth and services aimed at the prevention f dental diseases. These dental services can be delivered in health clinics, such as those attached to schools, firms, homes for the aged etc, as well as in own consulting rooms. They cover services in the filed of general dentistry, such as routine dental examinations, preventive dental care treatment of caries etc., The Service Accounting Code of this services is 999312 as per GST Law, 2017.
6. Childbirth and related services: This service includes :
(1) Services such as supervision during pregnancy and childbirth,
(2) Supervision of the mother after birth.
The Service Accounting Code of this services is 999313 as per GST Law, 2017.
7. Nursing and Physiotherapeutic services: This services includes:-
(1) Services in the field of nursing care (without admission), advice and prevention for patients at home, the provision of maternity care, children’s hygiene etc.,
(2) Services in the filed of physiotherapy, ergotheray, occupational therapy etc.,
The above services are provided by qualified practitioners other than medical doctors. The Service Accounting Code of this services is 999314 as per GST Law, 2017.
8. Ambulance services: This services includes involving the transport of patients by ambulance, with or without resuscitation equipment or medical personnel. The Service Accounting Code of this services is 999315 as per GST Law, 2017.
9. Medical Laboratory and Diagnostic imaging services: This service includes :
(1) Analysis and testing services provided by medical laboratories
(2) Diagnostic-imaging services without analysis or interpretation i.e. X-Ray, ultrasound, magnetic resonance imaging (MRI) etc. The Service Accounting Code of this services is 999316 as per GST Law, 2017.
10. Blood, sperm and organ bank services: This services relates to services provided by blood, semen, embryo stem cells, tissue and transplant organ banks, including storing and cataloguing of available specimen, matching of donated specimen and potential recipients etc., The Service Accounting Code of this services is 999317 as per GST Law, 2017.
11. Other human health services including homeopathy, unani Ayurveda, naturopathy, acupuncture etc., : This services relates to Other paramedical human health services not elsewhere classified such as acupuncture, aroma therapy, speech therapy, homeopathy, nutrition therapy etc., These services are provided by qualified practitioners, other than medical doctors The Service Accounting Code of this services is 9993139as per GST Law, 2017.
Residential care services for the elderly and disabled:
12. Residential health care services other than by hospitals: This services includes combined accommodation and medical services provided without the supervision of a medical doctor located on the premises. The Service Accounting Code of this services is 999321 as per GST Law, 2017.
13. Residential care services for the elderly and persons with disabilities: This services includes:-
(1) Round the clock care services by residential institutions for elderly persons,
(2) Round the clock care services by residential institutions for young persons and adults with physical or intellectual disabilities, including those having disabilities in seeing hearing or speaking.
The Service Accounting Code of this services is 999322 as per GST Law, 2017.
Other Social Services with accommodation :
14. Residential care services for children suffering from mental retardation, mental health illnesses or substance abuse: This services provided to children by facilities for alcoholism or drug addiction treatment, psychiatric convalescent homes for the emotionally distributed, mental retardation facilities or mental health halfway houses. The Service Accounting Code of this services is 999331 as per GST Law, 2017.
15. Other social services with accommodation for children: This services relating to residential social assistance services involving round the clock care services to children and youths i.e. social services provided by orphanages, homes for children in need of protection, homes for children with emotional impairments, juvenile correction homes etc, . The Service Accounting Code of this services is 999332 as per GST Law, 2017.
16. Residential care services for adults suffering from mental retardation, mental health illnesses or substance abuse: This services related o services provided to adults by facilities for alcoholism or drug addiction treatment, psychiatric convalescent homes for the emotionally distributed, mental retardation facilities or mental health halfway houses. The Service Accounting Code of this services is 999333 as per GST Law, 2017.
17. Other social services with accommodation for adults: This services relates to :-
(1) Residential social assistance services involving round the clock care services to adults, i.e. social services provided by homes for single mothers,
(2) Other social rehabilitation services .
The Service Accounting Code of this services is 999334 as per GST Law, 2017.
Social services without accommodation for the elderly and disabled:
18. Vocational rehabilitation services: This services relating to Vocational rehabilitation services for persons with disabilities, where the social assistance component is predominant. The Service Accounting Code of this services is 999341 as per GST Law, 2017.
19. Other social services without accommodation for the elderly and disabled n.e.c.: This services includes:-
(1) Old-age visiting and assistance services,
(2) Non-residential social services such as the provision of daytime shelter and elementary play-related teaching to children and young people with disabilities,
(3) Invalid visiting and assistance services.
The Service Accounting Code of this services is 999349 as per GST Law, 2017.
Other Social services without accommodation:
20. Child day-care services: This services relating to provision of daytime shelter and elementary play-related teaching to small children (Day-Care services) in nursery school. The Service Accounting Code of this services is 999351 as per GST Law, 2017.
21. Guidance and counseling services n.e.c related to children: This services relating to guidance and counseling services not elsewhere classified delivered t individuals and families, generally the children’s parents in their homes r elsewhere. (Such services may deal with behavioral and other problems related to children i.e. broken home problems, school problems, development problems, prevention of cruelty to children, crisis intervention services, adoption services etc., The Service Accounting Code of this services is 999352 as per GST Law, 2017.
22. Welfare services without accommodation: This services includes:
(1) Welfare services that do not include accommodation services, such as:
(a) Eligibility determination services in connection with welfare aid, rent supplements and food stamps,
(b) Household budget counseling services
The Service Accounting Code of this services is 999353 as per GST Law, 2017.
23. Other social services without accommodation n.e.c.: This services relating to other social services not including accommodation services, such as:-
(1) Marriage guidance services including matrimonial services provided by various individual/firms either through online or in person,
(2) Guidance services delivered to persons o parole or probation,
(3) Social assistance services to disaster victims, refugees and immigrants including temporary shelter services.
Requirement of registration: : If provided only exempted services, not liable for registration under Section 23 of the CGST Act, 2017, otherwise liable to take registration in accordance with Section 22 and 24 of CGST Act, 2017. Benefit of threshold limit specified under Section 22 of the GST Act, 2017 is available, subject to compulsory registration as per Section 24 of the CGST Act, 2017. Aggregate turnover includes taxable as well as exempted supplies.
Input Tax Credit:
Claiming of Input Tax Credit is not eligible, if used in providing exempt educational services. Input Tax Credit shall be determined in accordance with rule 42 or 43 of the GST Rules, 2017, Based upon taxable and exempted turnover.
Place of supply of Medical, Health Care and Social Care Services under GST Scenario:
|S. No||Description||When the supplier and recipient are located in India||When either supplier or recipient are located outside India|
|1||Healthcare Service||As per Section 12(4) of Integrated Goods and Services Tax Act, 2017(IGST): Location where the services are actually performed.||As per Section 13(3) of Integrated Goods and Services Tax Act, 2017(IGST): Location where the services are actually performed. Refer Note-1 of Rule 7 of IGST Rules, 2017.|
> Where services are supplied at more than one location, including a location in the taxable territory its place of supply shall be the location in the taxable territory.
> Where the services are supplied in more than one State or UT, the place of supply of such services shall be taken as being in each of the respective State or UT and the value for services separately collected or determined in in terms of the contract or agreement entered into this regard or in the absence of such contract of such contract or agreement on such other basis as may be prescribed (Please refer Rule 7)
> Value of services where services are provided I more than one State/ UT, In the absence of contract or agreement. As per Rule 7 of the IGST Rules, 2017, has been notified vide Notification No.04/2018-IT dated.31st December, 2018 as per below table:
|Nature of Service||Manner of Allocation|
|Services supplied to individuals.||By applying the generally accepted accounting principles.|
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