Taxation of Health care services & liability to register under GST
Health care services are very essential part life as well as in economy. Before imposing any taxes on such organization every Government will think twice. In pre GST regime as well as in post GST regime, Government has kept these services under the exemption category. But whether all the services are exempted? We will discuss each and every services related to health industry and its tax treatment in GST regime.
According to Notification No 9/2017 of IGST or Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 which is produced below for ease of understand:
“Services by way of- (a) health care services by a clinical establishment, an authorised medical practitioner or para-medics; (b) services provided by way of transportation of a patient in an ambulance, other than those specified
Before claiming exemption one should know who is covered in term used exemption
1.Meaning of“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 carefor 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;
2.Meaning of “authorised medical practitioner” 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 Indiaas per any law for the time being in force;
3.Meaning of “Health Care services” means 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 includehair 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;
Other than above exemption there are some additional exemption which Government has provide
- 46, Services provided by a veterinary clinic in relation to health care of animals or birds.
- 73, Services provided by the cord blood by way of preservation of stem cells or any other service in relation to such preservation.
- 74, Services by way of transportation of patients in Ambulance.
- No. 48, Services provided by a veterinary doctors services in relation to health care of animals or birds.
- No. 76, Services provided by the cord blood banks include other blood banks by way of preservation of stem cells or any other services for such preservation.
- No.77, Services by way of transportation of patients in Ambulance.
- No. 77, Services of medical tests done in clinical establishment.
- No. 78, 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.
- No.77, room rent charged for patients are exempted but if the hospital is renting space for a chemist shop or providing rooms on rent for care takers then attracts GST.
Taxable Services of health care organization:
If hospital runs medical shops in their own premises on rent basis then such rent income would be liable to tax under GST. & for the purpose of turnover calculation such rental income would be included. or hospital themselves sales medicine then also it is taxable at rate specified under GST Schedule.
Requirement of Registration:
In GST, turnover includes sum total of all outward supplies of goods & services means Exempted supplies + Tax free supplies + Taxable supplies.
In case of health care services are only provided exempted services then providers of health care services is not supposed to take any registration no. under GST.
But if any small part of supply is taxable and if turnover including above supplies exceeds 20 lakhs then it is liable for registration under GST.
Some unresolved issues clarified by C.B.I & C, Clarification vide Circular No. 32/06/2018 TRU dated 12-02-2018:
1) Hospitals hire senior doctors/ consultants/ technicians independently, without any contract of such persons with the patient; and pay them consultancy charges, without there being any employer employee relationship. Will such consultancy charges be exempt from GST? Will revenue take a stand that they are providing services to hospitals and not to patients and hence must pay GST?
Clarification: Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not, are healthcare services which are exempt.
2) Retention money: Hospitals charge the patients, say, Rs.10000/- and pay to the consultants/ technicians only Rs. 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood pressure etc. Will GST be applicable on such money retained by the hospitals?
Clarification: 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 recognized 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.
3) Food supplied to the patients: Health care services provided by the clinical establishments will include food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may be outsourced by the Hospitals from outdoor caterers. When outsourced, there should be no ambiguity that the suppliers shall charge tax as applicable and hospital will get no ITC. If hospitals have their own canteens and prepare their own food; then no ITC will be available on inputs including capital goods and in turn if they supply food to the doctors and their staff; such supplies, even when not charged, may be subjected to GST.
Clarification: 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.