Veterinary Healthcare Services: A GST Perspective

Healthcare is necessity for every species whether human, animal, bird, etc. Prior to implementation of GST as well as Post implementation of GST, Healthcare Service is exempt from Service Tax or GST. Majority of Healthcare Services are exempt in nature but majority of inward supply of goods / services /capital items are taxable. Therefore, Healthcare Services providers have to bear the cost of GST on all inward supplies. As outward supply is exempt, input tax credit cannot be availed as per Section-17(2). Following inward supplies received by the Healthcare Service Provides attracts GST. Therefore, it creates extra cost and ultimate burden is on patients.

• Hospital Furniture such as Patient Beds, ICU Beds, other furniture.
• Handwash, Sanitizers, Masks, Disinfects, Gloves and PPE Kits.
• Ventilators, Operation Theatre, Sonography and Laparoscopy Machines and Instruments.
• Diesel Generators, Inverters, Air conditioners, Television, Refrigerators. Computers/Laptops and
• All types of electric/electronics items and labour.
• Services of Housekeeping and Securities.
• Software and other IT Services.
• Laundry Services
• Ambulance
• Services of disposal of Biomedical Waste.
• Rental Services.
• CA Services.
• Management Consultancy Fees.
• Stationery Items.
• Canteen Services.
• Bank Charges
• Surgical Items, Medicines and consumables.

Healthcare Services are exempt from GST in India to ensure that essential medical services remain affordable. Majority of services provided by the Healthcare Service providers are exempt but still few healthcare services are not exempt. Let us understand in detail.

Legal Provisions under GST for Veterinary Hospitals:

Entry No.46 of Notification No.12/2017- Central Tax (Rate) Dt.28-06-2017  

– Services by a veterinary clinic in relation to health care of animals or birds.

– Services provided by veterinary clinic for diagnosis, treatment and care of animals and birds is exempt by above entry.

Entry No.74 of Notification No.12/2017 (Central Tax) – Rate Dt.28-06-2017

(a) Health care services by a clinical establishment, an authorised medical practitioner or paramedics;

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

As per above entry Healthcare Services provided by a Clinical Establishment, an Authorised Medical Practitioner or Para-medics is exempt from levy of GST.

– Definition of Healthcare Services is given in the Notification.

 “Healthcare Services” meaning any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised 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;

 – If we interpret above definition, Healthcare Services includes Diagnosis also. It means services provided by all Pathology Laboratory (for all types of tests), X-Ray Services, CT Scan, MRI Services, Mammography, Colonoscopy, Bronchoscopy etc. is exempt.

–  Treatment and Care of illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India is exempt. Treatment or Care provided by Healthcare Service Providers by any recognised medical system is exempt from GST. Treatment is provided by healthcare service providers in many ways such as through Medicine, through Surgery or through radiation.

Recognised systems of Medicines in India: 

1. Allopathy – A name for conventional medicine. (Drugs, Vaccination, Radiation, Surgery etc.)

2. Yoga- A set of Physical and Mental Exercises, originally from India, intended to give control over mind and body.

3. Naturopathy- A system of treatment of disease that avoids drugs and surgery and emphasizes the use of natural agents (such as air, water) and physical means.

4. Ayurveda- Traditional system of medicines that seeks to treat mind, body and spirit by diet, herbal medicines, exercise and meditation.

5. Siddha- Traditional system of medicine originating in ancient times in South India.

6. Unani- Body comprises of four basic elements and disturbance in this equilibrium result in disease.

7. Homeopathy– A system of treating disease in which sick people are given very small amount of natural substances.

– Treatment and Care provided through any of the above recognised medical system is exempt from GST. Service provided by healthcare service providers for transportation of passengers to and from a clinical establishment is exempt from GST. It means when healthcare service providers have own Ambulance and charge collected for providing Ambulance Service to Patient is exempt from GST.

– There are few exceptions mentioned in definition of Healthcare Services. It means those services can not fall under exemption category of Healthcare Services so those are taxable.

Services which are not Healthcare Services: 

1.Hair Transplant Surgery– Hair Transplant Surgery is done to remove baldness which improves appearance of the person. Therefore, it is taxable.

2. Cosmetic Surgery– Cosmetic Surgery is a medical procedure that alters a person’s appearance for aesthetic reasons. It involves reshaping or enhancing parts of the body including face, thighs, buttocks, breasts etc. Such type of surgery is not exempt from GST.

3. Plastic Surgery– Plastic Surgery which is carried out to improve look or appearance is not exempt from GST. But when plastic surgery is carried out to restore or reconstruct anatomy or functions of the body is exempt from GST. E.g. When person gets injured due to accident or some other incident and he/she is advised to do plastic surgery to restore anatomy or functions of the body, in such case, plastic surgery is exempt from GST.

–  Definition of Authorised Medical Practitioner is given in the Notification.

“Authorised Medical Practitioner” means a medical practitioner registered with any of the councils of the recognised system of medicines established or recognised by law in India and includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force.

–  Below mentioned are councils established by Government to regulate different recognised systems of medicines. Medical Practitioner registered under any of the below councils is considered as “Authorised Medical Practitioner” for Entry No.74 of Notification No.12/2017 (Central Tax Rate) Dt.28-06-2017.e.g.

• NMC (National Medical Commission)
• AICPT (All India Council of Physical Therapy)
• NCIS (National Commission for Indian System of Medicine)
• CCRH (Central Council for Research in Homeopathy)

–  Definition of Clinical Establishment is also given in the Notification No.12/2017 Dt.28-06-2017. “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 recognised 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.

–  Above definition has included almost all places which are providing diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy. Definition is wide so that most of the healthcare services provided by different types of clinical establishment remains exempt.

Entry No.31A of Notification No.03/2022- Central Tax (Rate) (w.e.f.18-07-2022)

– Services provided by a clinical establishment by way of providing room [other than Intensive Care Unit (ICU)/Critical Care Unit (CCU)/Intensive Cardiac Care Unit (ICCU)/Neo natal Intensive Care Unit (NICU)] having room charges exceeding Rs. 5000 per day to a person receiving health care services.

–Rate: 5% (2.5% CGST and 2.5% SGST) (Without ITC)

-By above entry, Government has removed exemption on rooms provided by clinical establishment where per day room charges exceed Rs.5000 and GST is leviable on this service is currently 5% (2.5% CGST + 2.5% SGST) without Input Tax Credit. Government believes said category rooms are premium category rooms like suite rooms so GST should be imposed on those categories.

Understanding the Provisions and FAQs

Entry No.46 of Notification No.12/2017- Central Tax (Rate) provides specific exemption in relation to the healthcare services provided by Veterinary Hospital while Entry No.74 of Notification No.12/2017 (Central Tax) – Rate Dt.28-06-2017 provides exemption in relation to general healthcare services provided by clinical establishment or Authorised Medical Practitioner. It is noteworthy that Entry No. 74 does not restrict the applicability of exemption to only humans. Thus, the conjoint reading of Entry No. 46 and 74 provides better clarity with respect to the exempted services provided by way of treatment, injury, deformity, abnormality, pregnancy, pathology, X-ray, diagnosis, etc.

GST Applicability: Key Questions Answered (FAQs)

1. Is GST applicable on veterinary healthcare services?

No, veterinary healthcare services, including diagnosis, treatment, surgery, and inpatient care, are exempt from GST under Entry No. 46 of Notification No. 12/2017-Central Tax (Rate).

2. Is GST applicable on medicines supplied by veterinary hospitals?

For Inpatients: Medicines supplied to inpatients as part of their treatment are exempt from GST as they are part of a composite supply of healthcare services.

For Outpatients: Medicines supplied to outpatients through the pharmacy are taxable under GST at the rate of 12%.

3. Is GST applicable on diagnostic services like pathology and X-ray?

No, diagnostic services such as pathology tests and X-rays provided by veterinary hospitals are exempt from GST as they are part of healthcare services.

4. Can veterinary hospitals claim Input Tax Credit (ITC) on inputs?

No, since the output services (veterinary healthcare services) are exempt from GST, veterinary hospitals cannot claim ITC on the GST paid on inputs such as medicines, surgical equipment, and diagnostic tools except the ITC of medicine sold to outpatients by the outpatient pharmacy as the Medicines sold to outpatients by the pharmacy is taxable.

5. Is GST applicable on surgical services provided by veterinary hospitals?

No, surgical services provided by veterinary hospitals are exempt from GST as they are part of healthcare services.

6. Is GST applicable on room rent for inpatient care?

No, room rent and other inpatient services provided by veterinary hospitals are exempt from GST as they are part of healthcare services.

7. Is GST applicable on outpatient consultation and treatment?

No, outpatient consultation and treatment services provided by veterinary hospitals are exempt from GST.

8. Are consultancy charges paid by hospitals to senior doctors, consultants, or technicians—who are hired independently without an employer-employee relationship—exempt from GST, or can revenue argue that these services are rendered to the hospital rather than directly to patients, making them liable for GST?

Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not, are healthcare services which are

9. If a hospital charges a patient Rs. 15,000 and retains Rs. 5,000 for ancillary services—such as nursing care, infrastructure, paramedic support, and emergency services—while paying consultants or technicians Rs. 10,000, is GST applicable on the retained amount?

Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India[para 2(zg) of notification No. 12/2017- CT(Rate)]. Therefore, hospitals also provide healthcare services. The entire amount charged by them from the patients including the retention money and the fee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt.

10. When hospitals provide food to patients as part of healthcare services, it may be prepared in-house or outsourced. If outsourced, the supplier charges GST with no ITC available to the hospital. If prepared in-house, no ITC is available on inputs, and if food is supplied to doctors or staff—whether charged or not—it may attract GST.

Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable.

Summary of Taxability

In general, we have summarized the applicability of GST in Veterinary Healthcare Sector as follows:

Conclusion: Veterinary hospitals providing healthcare services to animals and birds are largely exempt from GST under Entry No. 46 of Notification No. 12/2017-Central Tax (Rate). This exemption covers a wide range of services, including diagnosis, treatment, surgery, pathology, X-ray, and inpatient care.

However, medicines supplied to outpatients through the pharmacy are taxable under GST. Additionally, veterinary hospitals cannot claim Input Tax Credit (ITC) on the GST paid on inputs, as their output services are exempt except specific ITC related to the medicines supplied to outpatients.

Understanding these provisions is crucial for veterinary hospitals to ensure compliance with GST laws and to avoid any potential disputes with tax authorities. By adhering to the GST regulations, veterinary hospitals can focus on providing quality healthcare services to animals while managing their tax liabilities effectively.

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Disclaimer: This article is for educational purposes only and is based on current tax laws and interpretations, which are subject to change. The content provided here does not constitute formal tax advice and should not be relied upon for decision-making without consulting a qualified professional. We are not responsible for any consequences arising from the use of this information. Unauthorized reproduction or distribution without permission is prohibited.