Healthcare is a basic necessity, and the government has provided GST relief to hospitals and medical services. However, not everything in a hospital bill is tax-free — there are grey areas that confuse both patients and healthcare providers.
This article explains which GST on hospital services are exempt , which attract GST, the relevant GST sections, key compliance points, and recent developments.
Table of Contents
1. GST Law on Healthcare Services
Under Notification No. 12/2017 – Central Tax (Rate), healthcare services provided by a clinical establishment, authorised medical practitioner, or para-medics are exempt from GST.
Relevant GST Sections:
- Section 2(74) of the CGST Act, 2017 – Defines healthcare services.
- Section 11 of the CGST Act, 2017 – Empowers the government to exempt goods or services.
Definition:
Healthcare services mean services by way of diagnosis, treatment, or care for illness, injury, or deformity in any recognised system of medicine in India.
2. GST on Hospital Services – Exempt
Fully GST-Free:
- Inpatient treatment (admitted patients)
- Consultation, surgery, diagnosis (by doctors)
- Room rent up to ₹5,000/day per patient
- Nursing, ICU, operation theatre charges (as part of treatment)
- Ambulance services
Example:
If admitted for heart surgery and your hospital bill is ₹1.2 lakh, no GST applies on surgery or room rent if it is below ₹5,000/day.
3. Where GST Applies on Hospital Services – Grey Areas
Some hospital-related supplies attract GST despite the core treatment being exempt:
| Service / Item | GST Rate | Notes |
|---|---|---|
| Room rent above ₹5,000/day | 5% | Entire amount taxable, without ITC (Notification 03/2022-CT) |
| Cosmetic/aesthetic surgery (non-medical) | 18% | Exceptions for reconstructive procedures |
| Food supplied to attendants/visitors | 5% / 18% | Depends on type of supply |
| Medicines to outpatients | 5% / 12% | As per GST rate for medicines |
| Hospital canteen sales to visitors | 5% / 18% | Restaurant rate applies |
| Health check-up packages for corporates | 18% | Considered business service |
| Renting space within hospital to pharmacies | 18% | Considered commercial rent |
4. Case Law & Advance Rulings
- Columbia Asia Hospitals Pvt Ltd – AAR Karnataka: Medicines and consumables supplied to inpatients are part of composite supply and exempt. For outpatients, GST applies.
- Kauvery Hospital – AAR Tamil Nadu: Room rent above threshold attracts GST even if treatment is exempt.
These rulings confirm that inpatient treatment packages are GST-free, but standalone supplies to non-admitted patients may be taxable.
5. GST Compliance Tips for Hospitals
- Separate Billing: Maintain clear segregation between taxable and exempt services.
- Room Rent Monitoring: Flag cases crossing ₹5,000/day for GST calculation.
- Maintain Records: Keep detailed records to defend in case of departmental audit.
- Avoid Wrong ITC Claims: No ITC on exempt healthcare services — only claim on taxable supplies.
- Regular GST Review: As rules and thresholds change, periodically review billing practices.
6. Practical Examples
Example 1 – GST Free
- Room Rent: ₹4,800/day × 4 days = ₹19,200 (No GST)
- Surgery: ₹70,000 (No GST)
- Medicines for inpatient: ₹10,000 (No GST)
- Total Payable: ₹99,200
Example 2 – GST Payable
- Room Rent: ₹6,200/day × 4 days = ₹24,800 → GST @ 5% = ₹1,240
- Surgery: ₹70,000 (No GST)
- Food for attendant: ₹1,500 → GST @ 5% = ₹75
- Total Payable: ₹97,615
7. Key Takeaways
- Essential healthcare services are GST-exempt.
- Room rent above ₹5,000/day attracts 5% GST.
- Cosmetic treatments, corporate check-ups, and certain canteen/food sales are taxable.
- Medicines for inpatients are exempt, but for OPD patients GST applies.
- Hospitals should ensure clear separation of taxable and non-taxable items in invoices.
8. Conclusion
The GST law tries to balance affordability in healthcare with revenue requirements. While essential treatment remains tax-free, certain non-core hospital services do fall under GST. Proper documentation, billing segregation, and awareness of exemptions can help hospitals stay compliant and patients avoid surprise charges.
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