Learn about GST applicability for doctors in India, covering service exemptions, registration needs, and taxable exceptions.
The 47th GST Council meeting clarified that services related to Assisted Reproductive Technology (ART) and In Vitro Fertilisation (IVF) are exempt from Goods and Services Tax (GST). These procedures are categorized as healthcare services. Furthermore, the council reduced the GST rate for ostomy and orthopedic devices, including artificial implants, from 12% to 5%. Services provided by bio-medical waste treatment operators to healthcare facilities will incur a 12% GST, with Input Tax Credit (ITC) eligibility. This analysis will delve into how these council updates impact GST applicability for medical professionals.
Applicability of GST on Medical Consultation and Services
Currently, most healthcare services rendered by doctors and hospitals are exempt from GST. These exemptions were initially established through Notifications No. 12/2017-Central Tax (Rate) and 9/2017 – Integrated Tax (R) on June 28, 2017. Subsequent amendments were introduced via Notification No. 04/2022-CT(R) on July 13, 2022, detailing the updated exemptions as follows:
- Healthcare services provided by clinical establishments, authorized medical practitioners, or paramedics are GST-exempt. An exception applies to hospital room services (excluding intensive care unit (ICU)/critical care unit (CCU)/neonatal intensive care unit (NICU)) costing over Rs. 5,000 per day, which are subject to GST, and no Input Tax Credit (ITC) can be claimed for these services.
- Patient transportation via ambulance services is also exempt from GST, with the exception of services already noted above.
It is important to note that healthcare services do not include hair transplants or cosmetic/plastic surgery, unless these procedures are performed to restore or reconstruct anatomy or bodily functions impaired by congenital issues, injuries, trauma, or developmental abnormalities. Therefore, healthcare services specifically cover the diagnosis, treatment, or management of diseases, deformities, injuries, abnormalities, or pregnancies.
To clarify further, doctors are exempt from GST for the services listed below:
| Medical service | Treatment under GST |
|---|---|
| Outpatient Department Services (OPD) | Consultations and treatments offered to outpatients are GST-exempt. Nevertheless, GST applies to medicines and implants sold to outpatients through hospital pharmacies. |
| Inpatient Department Services (IPD) | Inpatient services, encompassing doctor’s fees, consultations, medicines, implants, consumables, bed costs, operation theatre rental, and equipment charges, are exempt from GST as part of a composite supply. However, if medicines and food are provided as distinct, optional supplies, GST is applicable. |
| Medical Test Services | Medical tests performed in clinical facilities are exempt. |
| Medical Counselling Services | Doctor’s consultations aimed at curing ailments are GST-exempt. In contrast, consultations provided for general care purposes are subject to GST. |
| Cord Blood Bank Services | Blood bank services that involve stem cell preservation are GST-exempt. |
| Ambulance Services | Ambulance services do not incur GST. |
| Veterinary Services | Medical services for animals and birds by doctors are GST-exempt. |
X-rays, when provided as part of healthcare services, are also GST-exempt. Likewise, diagnostic services within clinical facilities are not subject to GST.
Conversely, these healthcare services are subject to GST:
| Miscellaneous service | Treatment of service |
|---|---|
| Renting | Rent paid to hospitals for establishing medical shops on their premises is subject to GST. |
| Waste Treatment Facility | Services by common biomedical waste treatment facility operators to clinical establishments for waste treatment or disposal attract a 12% GST, with ITC eligibility. |
GST Registration Requirements for Medical Professionals
Doctors offering exclusively GST-exempt healthcare services are not required to register for GST. However, if they provide any taxable services, GST registration becomes mandatory once their total annual turnover surpasses Rs. 20 lakh in regular states or Rs. 10 lakh in special category states. GST will be applicable on medicines sold through their clinical practice.
Interstate provision of healthcare services mandates GST registration. When calculating the annual aggregate turnover, it is essential to include both taxable and non-taxable sales. Therefore, the total annual turnover comprises all taxable, tax-free, and exempt supplies of goods and services.
GST Rates, HSN, and SAC Codes for Healthcare Providers
Doctor’s consultation services are exempt from GST. Healthcare services fall under chapter heading 99. Below is an itemized list of GST rates, HSN, and SAC codes applicable to doctors and hospitals.
| Healthcare Services | SAC Code | GST Rate |
|---|---|---|
| Healthcare services by a veterinary clinic for animals and birds | 9983 | NIL |
| Provision of health care services by an authorised medical practitioner, a clinical establishment, or paramedics except for hospital rooms (excluding ICU/CCU/ICCU/NICU) costing over Rs.5,000 per day | 9993 | NIL |
| Ambulance services | 9993 | NIL |
| Rehabilitation, therapy, or counselling and such services provided by rehabilitation professionals recognised under the Rehabilitation Council of India Act, 1992, at medical establishments, educational institutions, or rehabilitation centres established by the Central Government, State Government, Union territory, or any entity registered u/s 12AA or 12AB of the IT Act, 1961 | 9993 | NIL |
| Clinical establishment room services (excluding CCU/ICU/ICCU/NICU) costing over Rs. 5,000 daily for healthcare, with no ITC claims | 9993 | 5% |
| Human health and social care services | 9993 | 18% |
| Biomedical waste treatment/disposal services, or related processes, provided by a facility to a clinical establishment | 9994 | 12% |
| Healthcare Goods | HSN Code | GST Rate |
|---|---|---|
| Drugs or medicines, including their salts and esters, and diagnostic test kits, as specified in List 1 of Schedule 1 | 30 or any chapter | 5% |
| Formulations derived from bulk drugs listed in Schedule 1, List 2 | 30 | 5% |
| Medicaments (including Ayurvedic, Siddha, Unani, Homoeopathic, and Bio-chemic systems) produced following formulas in authoritative texts mentioned in the 1st Schedule to the Drugs and Cosmetics Act, 1940, or specific Homoeopathic Pharmacopoeias, and sold under their specified names | 30 | 5% |
| Drugs, medicines (including salts, esters), and diagnostic test kits (S.No.180), and formulations (S.No.181) from Schedule 1, for personal use | 9804 | 5% |
| Other personal consumption drugs and medicines | 9804 | 12% |
| Orthopedic appliances like crutches, surgical belts, trusses, splints, fracture aids, and devices worn or implanted to correct disabilities or defects, including artificial body parts and intraocular lenses (excluding hearing aids) | 9021 | 5% |
| Pharmaceutical goods detailed in Note 4 to Chapter 3006, such as sterile surgical catgut, tissue adhesives, suture materials (including sterile absorbable surgical/dental yarns), sterile absorbable surgical/dental haemostatics, sterile laminaria and tents, sterile dental/surgical adhesion barriers, ostomy appliances, and waste pharmaceuticals (excluding contraceptives) | 3006 | 12% |
To learn more about GST on medicines and pharmaceuticals, refer to this article.
Input Tax Credit (ITC) Eligibility for Doctors
As healthcare service providers, including doctors, are exempt from GST, they are unable to claim Input Tax Credit (ITC). The introduction of a 5% GST on hospital rooms, without ITC eligibility, has increased medical service costs. Even hospitals operating their own waste treatment facilities cannot claim ITC, despite a 12% GST liability.
Advance Rulings Pertaining to GST for Doctors
The Gujarat Appellate Authority of Advance Ruling (AAAR), in the M/s Baroda Medicare Pvt Ltd (2022) case, ruled that Occupational Health Check-up (OHC) services provided by hospitals, including services from doctors, nursing staff, and paramedics employed by the hospital, are exempt from GST. OHC services encompass health examinations, ambulance services, and related medical provisions for corporate employees. Additionally, health check-up camps conducted off-site are also exempt from GST. This ruling is anticipated to boost employer efforts in worker health and safety, and promote rural healthcare development.
In the M/s Jyoti Ceramic Industries Pvt Ltd (2022) case, the Maharashtra Authority of Advance Ruling (AAR) determined that services by dentists involving the fitting of artificial ceramic teeth, crowns, bridges, and dental restoratives are not subject to GST, provided these procedures are not for cosmetic purposes.
Summary of GST for Medical Practitioners
Most healthcare services in India are GST-exempt, meaning medical professionals do not typically incur GST on their services. However, the 47th GST Council meeting introduced a 5% GST on hospital rooms, which is expected to increase healthcare costs since hospitals cannot claim Input Tax Credit on this expense.
