The Goods and Services Tax (GST) Act, 2017, broadly exempts healthcare services in India. However, understanding the specifics requires some clarifying details:

Definition of Healthcare Services under GST:

“Healthcare services” under the GST Act 2017 refer to any service related to:

• Diagnosis or treatment or care for illness, injury, deformity, abnormality, or pregnancy.
• Services by way of transportation of the patient to and from a clinical establishment.

This definition covers a wide range of services, including:

• Consultations with doctors and other healthcare professionals.
• Medical and surgical procedures.
• Nursing care.
• Dental services.
• Complementary and alternative healthcare therapies.
• Ambulance services.

Exemptions and Specific Cases:

While most healthcare services are exempt, some exceptions exist:

• Hospital rooms exceeding Rs. 5,000 per day:Since July 2022, a 5% GST Act 2017applies to the portion of the room rent exceeding Rs. 5,000 per day non-ICU and Rs. 10,000 per day ICU.
• Cosmetic or plastic surgery (except reconstructive):These services attract a GST Act 2017 unless undertaken to restore functions due to congenital defects, developmental abnormalities, injury, or trauma.
• Hair transplant:This service is not exempt from GST Act 2017.

Additional Points:

• Medicines, consumables, surgical implants, etc., used within the exempt healthcare services are considered part of the package and are also exempt.
• Clinical establishments, authorized medical practitioners, and paramedics providing healthcare services are eligible for the exemption.
• Certain services provided by hospitals, like housekeeping or laundry, may not be exempt and could attract GST Act 2017

EXAMPLE

To provide you with accurate examples of healthcare services under the GST Act 2017, I need to know which specific state in India you’re interested in. GST Act 2017 rates and exemptions can vary slightly from state to state.

For example, in Tamil Nadu (where I am currently located), here are some examples:

Exempt healthcare services:

• Doctors’ consultation fees
• Nursing and physiotherapy services
• Ambulance services provided by government hospitals
• Medicines and drugs
• Diagnostic tests conducted in government hospitals

Taxable healthcare services:

• Hospital room rent exceeding Rs. 5000 per day per patient (5% GST)
• Services provided by private hospitals and clinics (may vary depending on the specific service)
• Certain medical equipment (may vary depending on the type of equipment) GST Act 2017.

FAQ QUESTION

1. Are all healthcare services exempt from GST?

Most healthcare services provided by clinical establishments, authorized medical practitioners, or paramedics are exempt from GST Act 2017. This includes services like:

• Diagnosis and treatment of illness, injury, deformity, abnormality, or pregnancy.
• Nursing care.
• Hospital services.
• Dental services.
• Ambulance services for patient transportation.
• Services covered by recognized systems of medicine in India like Ayurveda, Unani, and naturopathy.

2. Are there any exceptions to the exemption?

Yes, there are a few exceptions:

• Hospital rooms exceeding Rs. 5,000 per day:A 5% GST is levied on the amount exceeding Rs. 5,000 per day for room rent in a hospital.
• Cosmetic or plastic surgery (except reconstructive):GST Act 2017applies to cosmetic or plastic surgery procedures unless undertaken to restore or reconstruct body functions due to congenital defects, developmental abnormalities, injury, or trauma.
• Hair transplant:Any hair transplant procedure attracts GST Act 2017
• Goods and services supplied separately:Goods and services like medicines, food, or non-medical items supplied separately by a hospital or clinic are taxable under GST Act 2017.

3. What about the GST on medicines and medical equipment?

Medicines and medical equipment used in the course of providing exempt healthcare services are generally considered part of the composite supply and exempt from GST. However, if these items are sold separately, they might be subject to GST depending on their classification under the GST Act 2017.

4. Can hospitals claim input tax credit (ITC) on goods and services used for providing exempt healthcare services?

No, hospitals cannot claim ITC on goods and services used for providing exempt healthcare services. However, they can claim ITC on goods and services used for taxable supplies like the rent of non-residential rooms exceeding Rs. 5,000 per day or cosmetic surgery procedures GST Act 2017..

CASE LAWS

The Goods and Services Tax (GST) Act, 2017, exempts most healthcare services provided by clinical establishments, authorized medical practitioners, and paramedics. However, interpreting the scope of this exemption can be complex, and several case laws have clarified its application in specific situations. Here are some noteworthy cases:

Exemptions:

• HAAAR/2020-21/01 (Siemens Healthcare Pvt Ltd): This case clarifies that consultancy charges paid by hospitals to doctors and technicians are exempt as part of the overall healthcare service.
• KST/ARA/131/2019: This case confirms that healthcare services provided by nurses and physiotherapists at a patient’s residence are exempt, even if not done through a clinical establishment.
• KAR ADRG 105/2019 (Matrix Imaging Solutions): This case holds that diagnostic services provided to hospitals by labs or other establishments are also exempt under the healthcare exemption.

Taxability:

• GST AAR (Kerala)/5/2022 (Uralungal Labour Contract Co-operative Society Ltd): This case rules that construction services provided to a cancer center fall under the 18% GST rate, as it’s not considered a pure healthcare service.
• GST AAR (Maharashtra)/04/2022 (Jyoti Ceramic Industries): This case clarifies that artificial teeth, crowns, and bridges are not exempt healthcare services and attract the applicable GST rate.

Other Important Points:

• The exemption covers the overall package of healthcare services GST Act 2017, including room rent (up to Rs. 5000 per day), food for inpatients (as per doctor’s advice), and retention charges paid to doctors.
• Certain healthcare services like cosmetic surgery and weight-reduction programs are taxable.
• The GST Council periodically revises the exemptions and rates applicable to healthcare services, so staying updated is crucial.