Health infrastructure is an important indicator for understanding the healthcare delivery provisions and welfare mechanisms in a country. The Goods and Services Tax (“GST”) law has undergone various changes in the year 2022-23s. The 47th GST Council meeting held on June 28, 2022, and June 29, 2022, the GST Council proposed imposition of GST on hospital room rent.
In Notification No. 03/2022- Central Tax (Rate) (IX) after serial number 31 and the entries relating thereto, the following serial number and entries shall be inserted, namely: –
| (1) | (2) | (3) | (4) | (5) |
| “31A | Heading 9993 | Services provided by a clinical establishment by way of providing room [other than Intensive Care Unit (ICU)/Critical Care Unit (CCU)/Intensive Cardiac Care Unit (ICCU)/Neo natal Intensive Care Unit (NICU)] having room charges exceeding Rs. 5000 per day to a person receiving health care services. | 2.5 | The credit of input tax charged on goods and services used in supplying the service has not been taken. |
Room rent (excluding ICU) exceeding Rs 5000 per day per patient charged by a hospital shall be taxed to the extent of amount charged for the room at 5% without ITC.
Besides, hospitals are also concerned about the non-availability of input tax credit as cascading of embedded taxes will increase the cost of treatment for patients. patient is billed for the treatments or services offered and not primarily for the room rent charged. There are variety of costs incurred and determined for the purpose of billing to a patient. It can be contended that room rent charged by hospital is not an independent service and would be an essential part for medical care administration and should therefore be exempt from GST.
Disclaimer: This Article is only a knowledge sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update etc if any.
Published on: February 1, 2023