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GST & Tax Compliance for Healthcare Establishments
Under GST, health care services by clinical establishments are exempt but ancillary services, pharmacy sales, equipment hire, and medical tourism may be taxable. The fine print matters enormously. Wrong classification can lead to massive GST demands.
Healthcare GST Rate Guide
| Service / Supply | GST Rate | Key Note |
|---|---|---|
| Core healthcare services (OPD, IPD, surgery) | Exempt (Nil) | By clinical establishment, authorized medical practitioner |
| Pharmacy / medicine sales to patients | 0 - 12% | Rate depends on medicine; in-house pharmacy must charge GST |
| Diagnostic lab services (standalone labs) | Exempt (Nil) | If by authorized lab; composite supply generally exempt |
| Medical equipment hire / leasing | 18% | Taxable; ITC available for B2B transactions |
| Hospital room rent > ₹5,000/day | 5% (no ITC) | Post-July 2022 change rooms above threshold are taxable |
| Cosmetic & aesthetic procedures | 18% | Not covered under exemption fully taxable supply |
| Medical tourism facilitation (agencies) | 18% | If acting as intermediary for foreign patients |
| Staff canteen / cafeteria | 5% (no ITC) | Restaurant service rules apply |
Input Tax Credit — What Healthcare Businesses Can Claim
Since core healthcare services are exempt, ITC on inputs attributable to exempt supplies cannot be claimed. However, where a hospital also provides taxable supplies (pharmacy, room rent above threshold, cosmetics), ITC can be proportionately claimed. We conduct a rigorous ITC reconciliation to ensure maximum legitimate credit is claimed without any risk of reversal.
TDS Management for Hospitals
Hospitals and large clinics are required to deduct TDS on payments to doctors, consultants, vendors, and contractors. We manage your entire TDS calendar.
| TDS Section | Applicable On | Rate |
|---|---|---|
| Section 194J | Doctor / consultant professional fees | 10% |
| Section 194C | Contracts (housekeeping, laundry, catering) | 1 - 2% |
| Section 194I | Rent for clinic/hospital premises | 10% |
| Section 192 | Salaries of employed doctors and staff | As per slab |
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