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Healthcare services in India have a unique position under the GST framework. While many services are exempt from GST to ensure affordable medical care, some healthcare-related goods and elective procedures attract GST at varying rates. Understanding the GST structure on healthcare services is important for medical practitioners, hospitals, and patients alike.
Read on for a simplified insight into GST applicability, exemptions, rates, and compliance requirements relevant to healthcare. This can help you better understand your obligations and help you comprehend the tax impact on medical services.
GST on healthcare is not always straightforward. Some services are exempt while others attract tax. The taxable parts often depend on the nature and purpose of the service. Below are the key points you should remember:
Most curative services provided by clinical establishments, hospitals and doctors are GST-exempt. This keeps basic treatment like diagnosis, treatment, and surgery cheaper.
Services that are not strictly medical, such as cosmetics or wellness packages, may attract GST. The deciding factor is whether the treatment is therapeutic.
Many medicines and diagnostic services may be taxable or exempt depending on the item and supply chain. Packaged medicines sold by pharmacies are generally taxed.
Simple advice via phone or video can be taxable if it is not treated as an exempt medical service. The platform and payment mode can influence GST treatment.
Slab-based GST rates may be applicable on room rents, depending on room type and price. Some luxury rooms can attract GST while basic wards usually remain exempt.
Hospitals can claim input credit on GST paid for taxable goods and services used in healthcare delivery.
Healthcare services often use SAC 9993 and related codes for classification. Correct SAC use helps with filing and avoids ambiguity.
This tax approach aims to maintain affordable healthcare while ensuring GST compliance where applicable.
Certain healthcare services are explicitly exempt from GST. The law aims to keep medical treatment affordable. Exemptions focus on curative and essential services. Below are common exempt categories and why they are treated that way:
Treatment given to admitted patients is generally exempt. The exemption covers admission, nursing, surgery and related care. This prevents hospitalisation costs from rising due to tax.
Routine visits for diagnosis and treatment by doctors at clinics are usually exempt. The key is that the service is curative and intended for health.
Professional fees charged by registered doctors for treatment are commonly exempt. However, non-medical services by the same practitioner may be taxable.
Services directly related to blood or organ collection and supply are often exempt. These are treated as essential health services and thus fall outside GST.
Transport by ambulance for medical emergencies is usually GST-exempt. This keeps emergency transport affordable for patients in need.
Some basic health screenings organised by hospitals may be exempt if they form part of clinical care. But commercial wellness packages often attract GST.
These exemptions encourage accessible healthcare and reduce tax cascading for essential medical treatments.
GST applies when a service is commercial, cosmetic, or not directly curative. The purpose, nature and billing method matter. Below are common scenarios where GST is likely to apply:
Treatments aimed at appearance rather than health usually attract GST. These include elective cosmetic surgery and beauty treatments.
Services such as housekeeping, canteen supplies and hotel-like facilities may be taxable. Such charges can be shown separately on the bill.
Retail sale of packaged medicines is generally taxable under GST. Prescription status does not always change taxability.
If diagnostics are part of a medical treatment they may be exempt, but standalone commercial labs often attract GST. The supply context is key.
Platforms that aggregate doctors and charge fees may attract GST on the service portion. Your invoice should show the taxable component clearly.
Insurance premiums linked to medical coverage fall under GST.
When hospital rooms exceed prescribed limits or offer extra amenities, GST is imposed.
Charging for car parking, food supplied to visitors, or accommodation in hospitals can attract GST separately.
Thus, GST is levied on non-essential and commercial aspects of healthcare while leaving essential medical care exempt.
Healthcare services are mostly exempt under GST. A few specific services attract tax at low or standard rates. The table below summarises typical cases and the SAC/HSN codes where available.
| Service | GST Rate | Additional Points |
|---|---|---|
Healthcare services by clinical establishments, authorised practitioners and paramedics |
Nil (Exempt) |
Core curative services to patients are exempt. |
Hospital room charges (non-ICU) when > ₹5,000 per day |
5% |
No ITC is allowed to the hospital for such room charges. Entire room charge is taxable if it exceeds ₹5,000/day. |
Ambulance services for patient transport |
Nil (Exempt) |
Emergency transport is generally exempt. |
Services by biomedical waste treatment operators (to clinical establishments) |
12% |
Suppliers may claim ITC as allowed; service attracts GST. |
Cosmetic / aesthetic procedures (non-therapeutic) |
18% (default) |
Charged if not for restoration or reconstruction of bodily functions. |
These rates help delineate between necessary medical services and non-essential or commercial offerings attracting standard GST.
Goods used in healthcare have their own HSN codes and rates. Some items are taxed at concessional 5%, while others attract 12% or higher. You can check the official GST item list and Schedule entries for any updates or further details.
| Service | GST Rate | Additional Points |
|---|---|---|
Listed drugs, medicines and diagnostic kits (Schedule items) |
5% |
Essential and specified medicines and diagnostic kits attract 5%. |
Other drugs and medicaments for personal use |
12% |
Non-specified medicines and some formulations attract 12%. |
Orthopaedic appliances, intra-ocular lenses, implants |
Mostly 5% |
Many corrective or prosthetic appliances are at a concessional rate. |
Waste pharmaceutical products |
12% |
Disposal or waste pharma items attract a higher rate. |
These varied rates reflect policy measures to support affordable essential goods while taxing luxury or non-essential products.
Goods used in healthcare have their own HSN codes and rates. Some items are taxed at concessional 5%, while others attract 12% or higher. You can check the official GST item list and Schedule entries for any updates or further details.
| Room Type / Condition | GST Rate | Notes |
|---|---|---|
General room / ward (room charge ≤ ₹5,000 per day) |
Nil (Exempt) |
Core inpatient care remains exempt when under the threshold. |
Non-ICU room where charge > ₹5,000 per day |
5% |
No ITC allowed for hospitals on such room charges; the entire charge is taxable. |
ICU / CCU / NICU / critical care rooms |
Nil (Exempt) |
Critical care rooms are treated as part of core medical services. |
The tiered approach balances affordability in basic wards and revenue from premium rooms.
Even when most healthcare services are exempt, providers must manage mixed supplies and taxable sales. Good compliance keeps bills correct and avoids penalties.
If your annual aggregate turnover from taxable supplies crosses the threshold (₹20 Lakhs in normal states; ₹10 Lakhs in special states), you must register for GST. Include taxable and exempt supplies when calculating turnover. Registration is online on the GST portal.
Issue GST-compliant invoices for taxable supplies. The invoice must show your GSTIN, SAC/HSN code, taxable value, rate and tax amount. For mixed bills, show exempt and taxable items separately. Keep copies for audits.
Keep clear ledgers of exempt and taxable income, purchases, and supplier invoices. Accurate records support or refute ITC claims. Retain documents for statutory periods set by GST law. Good bookkeeping reduces disputes.
Registered suppliers must file periodic returns (GSTR-1, GSTR-3B and other forms as applicable). Declare outward taxable supplies and taxes collected. Even if most services are exempt, timely returns avoid penalties.
ITC is not available for inputs used exclusively for exempt supplies. If you supply both taxable and exempt services, apportion ITC correctly. Note that for hospital rooms taxed at 5%, hospitals cannot claim ITC on those supplies.
Compliance optimises tax liability management and supports smooth business operations in the healthcare sector.
GST changes how hospitals, clinics and pharmacies price services and goods. The effect differs by service mix and supply chain. Below are the main impacts you should know.
Increased Transparency: Uniform GST rates simplify tax structures, reducing cascading and opacity in hospital bills.
Standardisation of Taxation: GST has replaced multiple state and central levies, streamlining healthcare taxation nationwide.
Cost Implications: While essential services remain exempt, GST on medicines and non-essential services might slightly increase costs for end consumers.
Boost to Formalisation: GST encourages formal invoicing and accounting in private healthcare, improving compliance and accountability.
Encouragement of Tax Credit: Eligible providers benefit from input tax credits, reducing operational expenses.
Compliance Challenges: Smaller clinics may find GST registration and filing complex, requiring education and assistance.
Overall, GST is gradually harmonising taxation while protecting core healthcare affordability.
When a supply is taxable, calculate GST clearly and show it on the bill. For mixed invoices, separate exempt and taxable parts. Below are step-by-step rules and examples:
Determine Taxable Value: Identify the amount on which GST is levied (service fee, medicine cost, or room charges).
Identify Applicable GST Rate: Check if the service/item is exempt or taxed at 5%, 12%, or 18%.
Calculate GST Amount: Multiply the taxable value by the GST rate (e.g., ₹1,000 x 18% = ₹180 GST).
Add GST to Base Price: The total payable price = base price + GST amount (₹1,000 + ₹180 = INR 1180).
Ensure Separate Invoice Display: GST must be shown separately on invoices as per legal requirements.
Claim Input Tax Credit (if applicable): Providers deduct eligible input GST paid on purchases from collected GST before remittance.
This method helps providers and patients understand tax components clearly on medical bills.
GST on healthcare services in India is structured to protect essential medical care from tax while applying GST selectively to non-essential items and luxury services. Awareness of GST rates, exemptions, and compliance requirements is crucial for healthcare providers and patients alike. As the healthcare sector adapts to GST, transparency and formalisation are improving while efforts continue to maintain affordable medical services for the public. Understanding this tax environment empowers all stakeholders to navigate healthcare expenses with clarity and compliance.
Many essential and specified medicines, and certain diagnostic kits, attract GST at 5% under the schedules. Other drugs, formulations and non-specified items can attract 12% or higher depending on classification. Also consult your pharmacist for the exact item rate.
Professional fees charged by registered medical practitioners for diagnosis and treatment are generally exempt from GST. If you pay via a platform that charges service fees, that component may attract tax and should be shown separately on the invoice.
Core inpatient and most outpatient curative services supplied by hospitals are exempt from GST. However, taxable services include non-curative supplies, certain room charges above ₹5,000 per day, and outsourced services such as biomedical waste disposal.
Most medical services provided by clinical establishments and registered practitioners are GST-exempt. Taxable medical services may attract rates of 5%, 12% or 18% depending on the nature of service, SAC/HSN classification, and whether it is a mixed supply.
Telemedicine consultations can be exempt if they amount to professional medical advice by a registered practitioner. Yet platform fees, subscription charges or non-medical services linked to the consult may attract GST and should be shown separately on the bill for clarity.
ITC is not available for inputs used only for exempt supplies. When a hospital provides both taxable and exempt services, it must apportion ITC and follow GST rules; for many taxed room charges, hospitals cannot claim ITC against those supplies.
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