Hospitals bills may get dearer: Premium Healthcare services likely to attract GST Taxation

New Delhi: Certain healthcare services, said to be falling under the "premium" category are likely to fall under the ambit of Goods and Services Tax (GST) as the GST Council meeting scheduled for December 18 may give recommendations to this effect, according to recent media reports.

The move is speculated to come in the wake of the shortfall of revenue than expected numbers, and the center's commitment to the states of compensation of any revenue loss in the first five years of GST implementation.

With the ongoing economic slowdown, the centre is looking out to various avenues of revenue mobilisation with all eyes going to the GST Council meet tomorrow. Healthcare holds special status, as currently major medical services including hospitalization are out of the ambit of GST. Only those falling under the category of cosmetic surgery and hair transplants see attraction of GST. On the medicine front, four different GST rates ranging from NIL , 5%, 12% and 18% are applicable.

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However, sources in the government have been seen informing media persons that this situation may see a major change with premium healthcare services likely to see application of GST. These could include high value implants and medicines given to patients who are taking premium services from a healthcare service provider (hospitals, nursing homes). The taxable items may also include use of premium room and food and beverage services by patients, reports IANS.

"Healthcare is a vast area and certain services border on luxury or may not be essential to save the life of a patient. These may be considered for higher duty if the GST Council is unanimous on expanding the scope of taxation of healthcare services beyond hair transplants and cosmetic surgery," a state government official actively involved with the Council told IANS.

Moreover, the selected services is likely to attract rates of either 12 or 18%.

Under the plan in works for taxing healthcare services, the thinking is to make it mandatory for hospitals to bill medicines and hospitalisation charges separately. This, while plugging the leakage in GST collections, is also expected to boost tax collections from healthcare providers. Once this segregation happens, medicines used during hospitalisation would also attract tax. This is expected to increase the cost of healthcare services, but would make the hospital bills transparent.

Also, the entire healthcare services at hospitals may be given a threshold in terms of actual spent for availing of the service. If that spend is beyond a prescribed threshold, GST could be charged on such services that get complete exemption at present. This would mean that if a patient at a hospital is availing of room services in premium category, the same could be taxed. The same principle may apply for implants and other high value specialised consultancy services.

The GST Council meeting is scheduled for December 18. The objective of the meeting is primarily to figure out measures to address the economic slowdown and also to aid the Centre to pay compensation to the states on time that was promised under the new indirect tax regime, however, could not be paid due to lower GST growth.

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