Impact of GST on Healthcare services

1. What is the meaning of the term “health care services” under GST?

• Health care services means

• Any service by way of diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicine in India.
• Includes services by way of transportation of the patient to and from a clinical establishment
• Excludes, hair transplant, cosmetic or plastic surgery subject to certain exemptions (Refer FAQ no 3)

2. Are healthcare services exempted from GST?

• Health care services provided by clinical establishments, authorised medical practitioners or paramedics are exempted from GST. (Refer FAQ no 4 & 5)

3. Circumstances where plastic or cosmetic surgery is also considered to be healthcare services?

• The definition of healthcare services specifically excludes cosmetic or plastic surgery
• However, if the same are undertaken to treat congenital defects, development abnormalities, injury or trauma, the same will be considered as healthcare services and are eligible for the exemption.

4. What is a clinical establishment?

• Clinical establishment means any institution offering services relating to diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicine in India
• Hospitals, nursing homes, diagnostic centres, clinic etc.

5. Who are authorised medical practitioners for the purpose of exemption under GST Law?

• Authorised medical practitioners are,
  1. Any persons registered under any council of recognised system of medicine in India (or)
  2. Persons having requisite qualification to practice in any recognised system of medicine in India.

6. Will sanatoriums be considered as clinical establishments for the purpose of GST?

• Sanatoriums are medical facilities that treat chronic long term illness. It can also be used by the patients to rest for an extended period of time.
• The number of sanatoriums have declined with the advent of modern medicine, the existing sanatoriums though few in number are considered as clinical establishments and are exempted from GST.

7. What are the recognised system of medicines in India for the purpose of exemption of GST under health care services?

• The recognised system of medicines include Allopathy, Yoga, Naturopathy, Ayurveda, Homeopathy, Siddha and Unani
• Any other system of medicine as recognized by the Central Government for the purpose of exemption will also be exempted.

8. Taxability of the services provided by veterinary clinics

• Services provided by veterinary clinics in relation to healthcare of animals and birds are exempted from GST.

9. Will the consultancy charges paid to doctors who are not employed by the clinical establishment attract GST?

• Any charges paid (including retention charges) to doctors or consultants even if not hired by the clinical establishment, are exempted from GST.

10. What do you mean by the term “retention charges” that is deducted by the hospitals while making payment to consultant doctors?

• There are cases where a hospital will enter into agreements with consultant doctors where they will be compensated with a percentage of the fees paid by the patient to the hospital
• At the time of such payment, the hospital will deduct certain amounts as charges for ancillary services such as monitoring blood pressure, checking sugar levels, nursing assistance, use of infrastructure etc supplied by the hospital from the amount to be paid to the consulting charges.
• Such ancillary services are called retention charges and the same are also exempted from GST.

11. Will food supplied to patients in hospitals attract GST?

• Food, as advised by the doctors/nutritionists and supplied to the patients will be considered as a part of the composite supply of healthcare services and hence, are not separately taxable.
• But, supply of food to those who are not admitted including the attendants or visitors of the patients are taxable.
• Note: Food supplied to doctors or staff is also taxable, since the same are not expressly exempted.

12. Taxability of Ambulance services under GST Law

• Ambulance services provided by the government and private service providers are exempted from GST.

13. Taxability of Cord blood bank services under GST Law

• Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation are exempted from GST

14. Will renting of shops and auditoriums within the premises of a clinical establishment attract GST?

• Yes, the supply of any other service other than healthcare services within the premises of a clinical establishment will attract tax.
• Hence, rent collected for premises given on lease/rent by a hospital will attract GST.

15. Is GST applicable on the rent paid by the patients in respect of using hospital rooms?

• No, the amount of rent paid by the patients for using hospital rooms will be exempted from GST.

16. Should a MRI scan centre charge GST in its invoice?

• Diagnostic centres are included within the meaning of clinical establishments and the scope of healthcare services covers diagnosis. Hence, a MRI scan centre need not charge any GST