India is the largest producer for generics. 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 levy of Taxes.

In the service tax regime, the health care services were kept out of 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 ambulance, Blood Banks, treatment of clinical waste etc. Also, we would like to discuss about the taxability of other income of doctors in addition to income from practicing as a doctor. The GST impact on various issues are as under:

Exemptions notification on Health Care services under GST:

Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017 has exempted health care services vide entry no 77 which is reproduced as under:

 Healthcare Services by a Clinical Establishment or Authorized Medical Practitioner or Para medics are exempt from Goods and services tax”

For understanding the exemption, we need to understand below important terms used in the said notification. These terms are also defined/clarified in the explanations given in the notification as:

1. Health care services

2. Clinical establishment

3. Authorized Medical Practitioner

4. Paramedics

1. Health care services :

The said notification defines Health Care services as 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 Thus, all treatments excluding cosmetic treatments have been covered by this definition.

As per Oxford Dictionary, Health Care means the maintenance and improvement of physical and mental Health, especially through the provision of medical services.

2. Clinical establishment :

As per the said notification, meaning of clinical establishment is: –

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;

Section 2(e) of the Clinical Establishments (Registration and Regulation) Rules, 2010 defines clinical establishment as:

(i) a hospital, maternity home, nursing home, dispensary, clinic, sanatorium or an institution by whatever name called that offers services, facilities requiring diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicine established and administered or maintained by any person or body of persons, whether incorporated or not; or

(ii) a place established as an independent entity or part of an establishment referred to in sub clause (i), in connection with the diagnosis or treatment of diseases where pathological, bacteriological, genetic, radio logical, chemical, biological investigations or other diagnostic or Investigative services with the aid of laboratory or other medical equipment, are usually carried on, established and administered or maintained by any person or body of persons, whether Incorporated or not, and shall include a clinical establishment owned, controlled or managed by the :

    • The Government or a department of the Government;
    • A trust, whether public or private;
    • A corporation (including a society) registered under a Central, Provincial or State Act, whether or not owned by the Government;
    • A local authority; and
    • A single doctor,

But does not include the clinical establishments owned, controlled or managed by the Armed Forces constituted under the Army Act, 1950, the Air Force Act, 1950 and the Navy Act, 1957.

Meaning of various categories of Clinical Establishment as used in the above definition:-

(i) Hospital: As per WHO, hospital means – Health care institutions that have an organized medical and other professional staff, and inpatient facilities, and deliver medical, nursing and related services 24 X 7 hours. Hospitals offer a varying range of acute, convalescent and terminal care using diagnostic and curative services in response to acute and chronic conditions arising from diseases as well as injuries and genetic anomalies.

(ii) Maternity Home: Means any premises used or intended to be used for reception of pregnant women or of women in labour or immediately after child birth

(iii) Nursing home: Means any premises used or intended to be used for reception of persons suffering from any sickness, injury or infirmity and providing of treatment and nursing for them and include a maternity home. A nursing home is a small private establishment providing healthcare services with accommodation.

(iv) Clinic: A medical facility run by a single or group of physicians or health practitioners smaller than a hospital. Clinics generally provide only outpatient services and can have an observation bed for short

(v) Sanatorium: A sanatorium is an institution that provides medical treatment and rest, often in a healthy climate, for people who have been ill for a long time for chronic disease such as tuberculosis etc.

3. Authorized medical professional:

As per the said notification, authorized medical professional 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. The definition of authorized medical professional brings out the following prerequisites:

  • Practitioner should be registered with any medical council;
  • Practitioner should have requisite qualification to practice;
  • Such qualification should be of any system of medicine recognized in India.

Recognized medical system in India are : Allopathic , Ayurveda ,Siddha, Unani, Homeopathy, Yoga & Naturopathy.

Accordingly, qualified doctors holding recognized degrees in any of the above systems are covered in this entry if they are registered with their respective medical councils.

To sum up, any person as an individual or as part of clinic or hospital giving any kind of medical treatment through a duly qualified doctor empanelled with a recognized medical council, excluding hair transplant or cosmetic surgery is exempted from payment of GST.

4. Paramedics:

These are trained healthcare professionals such as nursing staff, physiotherapists, technicians, lab assistants etc. They are accountable for their services when provided independently and therefore exempt. Services by them in a clinical establishment would be in the capacity of employee and not provided in independent capacity and will thus 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.

Other Exemption under the above notification No 9/2017

(i) Services provided by veterinary doctors: (Entry No 48) : This entry exempts services in relation to health of animals and birds from GST. This entry does not have any prerequisite with regard to qualification, recognition or affiliation.

(ii) Blood Banks: (Entry No 76) : Cord Blood Banks include other Blood Banks and thus the services provided by Cord/Other Blood Bank for preservation of stem cells or any other services for such preservation are covered in Entry No: 76 and are thus Exempt from GST.

(iii) Ambulance Services: (Entry No 77)  : Providing of ambulance services are also exempt from the ambit of GST. GST or service tax is not applicable on ambulance services provided to Government under National Health Mission – MF(DR) (TRU) circular No. 51/25/2018-GST dated 31-7-2018 in respect of GST and CBI&C circular No. 210/2/2018-ST dated 30-7-2018 for service tax.

(iv) Medical Tests: (Entry No 77)  :Medical Test (either done in own Clinical establishment or done in the separate clinical establishment setup specially for such test) are covered in Entry No 77 and are thus Exempt. any GST.

(v) Bio Medical Waste: (Entry No 78):This entry excludes unconditionally, 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, services provided to hospitals by way of treatment and disposal of bio medical waste is not taxable under GST under the strength of this entry

(vi) Room rent for patient (Entry No 77 ) : Rent charged for rooms for patients are not taxable under GST. However, if the hospital is renting space for a chemist shop or providing rooms on rent for care takers, then that would attract GST.

(vii) Services provided by hospitals under health care service are naturally bundled services and exempted under GST Act

Sl Description Reference Remarks
a Medicines, Consumables, in-plants Kindorama Healthcare (p) Ltd in re[2019] AAR-KERALA Supplied by hospitals  to patient during diagnosis or treatment
b Food Supplies to patients CBI&C response on FAQ dt ON GST Chapter 4A No. 28 Its a composite supplies with health care services
c. Room Rent in hospital CBE&C circular No. 27/1/2018, dated 4-1-2018. it is a composite service where principal supply is of health care].
d Diagnosis and pre and post counselling service Sayre Therapuetics (P.) Ltd., In re* [2018] AAR-Karnataka its qualify as healthcare services which attract nil rate of central tax.
e Diagnosis and  counselling centres Medivision Scan & Diagnostic Research Centre (P.) Ltd., In re [2019] AAR – Kerala qualifies as  a clinical establishment

(viii) Retention money kept by hospital from payments to consultants/technicians In some cases, hospital allows private doctors to use consulting rooms in hospitals. The patient pays fees to hospital out of which hospital pays certain amount to the private doctor/technician. For example, the hospital may collect fee of Rs 10,000 out of which Rs 7,500 are paid to the private doctor/technician. The amount retained by hospital is to provide ancillary services like infrastructure, nursing, paramedic care, emergency services etc .GST is not applicable on amounts paid to retention money kept by hospital from payments to consultants/technicians – CBI&C circular No. 32/06/2018-GST dated 12-2-2018. (Sir Ganga Ram Hospital v. CCT (2018) 94 226 (CESTAT).) 

(ix) Services provided by rehabilitation professionals recognised under the Rehabilitation Council of India Act, 1992 by way of rehabilitation, therapy or counselling and such other activity as covered by the said Act at medical establishments, educational institutions, rehabilitation centers established by Central Government, State Government or Union territory or an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) are exempt w.e.f. 1-1-2019 – Sr No. 74A of Notification No. 12/2017-CT (Rate) and No. 9/2017-IT (Rate) both dated 28-6-2017, inserted w.e.f. 1-1-2019.

Health care Services which are not exempted under GST : 

(i) Sale of Medicines is Taxable: Medicines are taxable under GST. Although most of the medicines are taxed at 5% under GST laws but few are also taxed at 12% and some at 18%. We need to identify the HSN of the medicines / consumables / injectables and implants to ascertain the rate of tax applicable to them. If medicines etc. are purchased for resale then ITC is available and sale would attract tax.

(ii) In an establishment , tests done from outside accredited laboratory and  giving consultancy is not clinical establishment and hence, exemption is not available. (J C Genetic India P Ltd. In re (2019) 73 GST 272 = 104 88 (AAR-MP),)

(iii) Food supply to attendants or visitors or out patients on chargeable basis is not exempted . Further, tax is payable by supplier of foods if supply of food is outsourced – CBI&C circular No. 32/06/2018-GST dated 12-2-2018.

(iv) Tax payable if hospital gives part of premises on rent  – GST is leviable on rent paid/payable for premises, given on lease by hospital – Tathagat Health Care Centre LLP,In re [2018] 93 419 (AAR-Karnataka)

(v) Tax ability of other Income of Doctors : We shall also discuss about the other income of doctors in addition to the income from the medical profession and also discuss about the necessity of the registration in GST. GST is applicable on amounts paid to senior doctors by hospitals.

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 sum 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 is 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 having hospital in Delhi, Haryana and UP. He has shops also in these states which has 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 on these states as the threshold limit requiring registration has crossed.

Taxability on Reverse Charge:

Any hospital, clinic or doctor required to be registered on account of its aggregate turnover containing any component of taxable supply will be covered under provisions of reverse charge. Reverse charge can broadly be classified in three categories. Specified services under section 9(3), Inward supply received from specified  person under section 9(4) and certain imports. ITC on tax paid on reverse charge is available but subject to restrictions and negative list inbuilt in the act.

Input Tax Credit :-

Under GST, duty charged on the import of technical machinery and equipment needed by the health sector would be allowed as a credit. This benefit of the overall reduction in the cost of technology is due to implementation of GST.

Inverted Duty Structure:-

One of the prime concerns for the healthcare sector is the inverted duty structure that adversely impacts the domestic manufacturers. The cost of inputs is much higher than output, i.e., the raw materials are more costly in terms of duty than the finished product itself hence depressing investments from the manufacturers. For addressing this issue, the GST structure brought in a refund of the accrued credit. It has prove to be the biggest advantage for the healthcare sector and would act as a booster for the growth of healthcare industry.


Health care being important and many times life saving, most of the health care services are exempt from GST. However, the Medicines, Consumables, and provision of services by plastic surgeons (when cosmetic in nature) are not exempt. The artificial limb which is essential for restoration of life and implants as mentioned above are also taxable. Therefore, we can say that medical services are mostly exempt but not fully exempt.

(The author can be reached at

(Republished with Amendments. Amendments been made by CA Anita Bhadra)

Author Bio

Qualification: CA in Job / Business
Company: PSU
Location: GURGAON, Haryana, India
Member Since: 04 May 2017 | Total Posts: 21
CA Deepak Jauhari - B.Com, FCA • Sr. General Manager, Power Grid Corporation of India Limited (A Maharatna PSU). • 30+Years of experience in various capacities including Direct and Indirect Tax Matters. • Author of Three Books (Two in GST and recently one on Investment and Financial Pla View Full Profile

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More Under Goods and Services Tax


  1. Vipul Sharma says:

    Apex hospitals in Jaipur are the best service provider as they have the best doctors and surgeons, and provide the best services to their patients. It is one of the most trusted hospitals in India. The hospital has a team of expert doctors who work with dedication and sincerity to provide treatment for any kind of ailment or disease that a human can suffer from.

  2. Gurumurthy says:

    sir one of my client is providing medical training to other hospital staff and medical students across india and aboard, is GST applicable for such a service? please let me know and our client is running a medical training institute apart from he is a partner of Hospital.

  3. CA Kishore Chandra Behera says:

    One of my clients is in Rehabilitation and palliative care services and we have taken a building on rent and doing interior and procuring assets to run the medical services. Since we are paying GST for all those expenses and our services are exempted, how to get the input benefits.

  4. Amrit Senapati says:

    I am running a Paramedical service, mainly providing nursing and elderly care at home, is I’m exempt from gst? Some people’s telling exempt and some are telling not exempt. In gst portal also not clear.

  5. Manoj says:

    I am running a Paramedical service, mainly providing elderly care at home, is I’m exempt from gst? Some people’s telling exempt and some people’s are telling not exempt. In gst portal also not clear.

  6. Sudheer S says:

    Can hospital having medicinal sales of 70 lakh and in patients room income of rs.50 lakh, second being exempted from gst , can go for composition registration for medical sales


    I am a doctor and have my own clinic where I provide consultation and dispense medicines to my patients. I also manage emergencies using some medicines. These patients stay for maximum one day and then either discharged or referred to other hospitas. If suppose, I earn 15 lacs by consultation, 4 Lacs by emergency management where medicines of total 3 lacs were used, and I dispensed medicines to my patients for about 19 lacs. Now i want to understand from you on following points.
    1. Is GST registration required?
    2. Which part of the above income is taxable if any?
    3. If earning of a doctor by consultation is 22 lacs and by dispensing of medicines of a total MRP 32 lacs, Is GST required in such a case.
    I will be highly obliged.

  8. s says:

    I am a paediatrician and public health expert community research director of an organisation. Hired as a consultant.
    How much GST do I have to pay

  9. garima tater says:

    if a doctor providing educational and research services to pharmaceutical companies and receiving payment agst it in addition to his exempted supply of services required to get GST registration if threshhold limit crossed

  10. Umesh says:

    Sir I do kidny stone sacnIng of my wife. By they take payment only cash there is no other payment allow and they don’t give GST bill so in that time what should I do and where to complent against them or that diagnostic lab….?

  11. SACHIN says:

    Dear Sir
    when a Neuro stent is imported by any corporate hospital can they take benefit of IGST ?

    Should the patient dispute the invoice if the SAC code for this stent is shown as 999311 – In patient services instead of HSN code against the stent.

    The hospital is likely to claim in full from TPA but not pass on the benefit of ITC of IGST (Taken by the hospital as they are registered under GST) to the patient(not registered under GST).
    As the invoice value is greater than the insurance cover , the incremental cost will have to be borne by the patient .

    Please clarify

  12. Raman Juyal says:


    If a company has employed doctors to give medical treatment to its employees and recover the amount from them. Will it be a taxable supply?

    Secondly, If a public limited company provides hospitality services and also provides medical facilities hiring doctors as employees. Will it be a taxable supply?

  13. Mayank Agarwal says:

    Hello Authors.. Thank you for the exhaustive explanation. However as per the article I note that Physiotherapists are paramedics and services by them are exempt. But, under the SAC code 999314 for physiotherapists the rate of 18% is given. So, services by paramedics are exempt or not?

  14. Tarun says:

    Dear Sir,
    need to check on one point that if we offer a healthcare service by the help of any other clinical establishment and we work as a healthcare service provider then service will be exempted or not?. Kindly advise on the same.

  15. English class says:

    Very good information of web site.
    Request to correct small grammatical errors.
    When you use the word ‘discuss ‘ not to write ‘discuss about’ . Discuss will never be followed by about.

  16. CA. Shalini says:

    Good morning sir,

    In an IVF clinic, where there are no inpatients but undergoing treatment with our doctors, what will be the applicability of gst on :

    1. Sale of medicines covered within the package amount.
    2. Sales of medicines to the same patients but not covered within the package amount.

    Thanking you

  17. Shalini says:

    Good morning sir,

    In an IVF clinic, where there are no inpatients but undergoing treatment with our doctors, what will be the applicability of gst on :

    1. Sale of medicines covered within the package amount.
    2. Sales of medicines to the same patients but not covered within the package amount.

    Thanking you

  18. says:

    Very Well elaborated Sir, My Question is, whether service of Rehablitation activity provided by a non medical practisoner is taxable or not?


    i am a doctor.
    my taxable income is 32 laks per annum.
    my commercial property rent income is 1.82 lakhs per annum.
    should i registered for gst ?
    should i liable for gst ?

  20. Samuel Solomon says:

    In-patient Hopsital Services are non-taxable.
    What about Out-patient SERVICES such as Dressings, Nebulisation, Plaster of Paris applications for fracture, Drainage of abscess ….. all of these are OP PROCEDURES but require some items that are taxable, such as Drugs, Local Anaesthetics, Injections etc, which, if supplied individually to out-patients would be taxable. Since they are part of the treatment package, do they lend themselves to Taxable OP items?

  21. tengyal says:

    how much gst a independent nurse has to pay for visiting critical patients discharged from hospital and provide care/monitoring their health at the patients home or giving medicare/medicines etc

  22. Pranav says:

    Sir , we are a ltd. company, and we are receiving medicines supply from pharmacy just for staff welfare. We are not engaged in any medical services output supply.
    I like to know if we can take ITC on such medicines purchased by us??

  23. Vishal Kulkarni says:

    Health Care Services have defined to mean any Service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines. Accordingly, if any Clinic / Hospital is providing Medical Check-up Services to any person such as employees of any firm, whether it will be exempt from GST ?

  24. Inder Singh says:

    Dear sir,
    I provide a medical services to aged person at their home and places, i am confused that how many GST Tax charge from customer or my patient where is my SAC is 9993. And how many GST Tax pay to Government for this services after GST registration.
    Kindly suggest me for this.

    Thanks & Regards
    Inder Singh Chahar

  25. VIVEK says:


  26. CMA ANIL SHARMA says:

    Johari ji well elaborated article. Congratulation to both of you.
    One thing I want to get it cleared that most of the Hospitals are giving package for Open Heart Surgery or Bye Pass surgery and charge lum-sum amount. In that package Hospital sell medicines also but don’t pay tax. There are decided cases also.
    What is position under GST or your view point.

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