Impact of GST on healthcare sector

Impact of GST on healthcare sector


Ritul Patwa

Ritul Patwa

333 week ago — 5 min read

The healthcare sector is at the highest priority for the government; and a significant portion of government spending goes towards providing low cost health care facilities to the public at large. Considering  the importance of medical facilities and the noble cause delivered by medical practitioners, the majority of healthcare services have been exempted under GST. However, there are several activities within the healthcare segment which are not covered within the GST exemption;and it is vital for all professionals working in the healthcare sector to know and comply with the GST law wherever it is applicable.


This article covers:

1. Exemption given to healthcare service under GST

2. Illustrative list of Services that are exempted under GST and supplies that are liable for tax under GST

3. Rate of GST on various taxable supplies


PART 1 : GST Exemption on healthcare services : Government has exempted healthcare service vide Entry No. 77 of Notification no 09/2017 – Integrated Tax (Rate) date 28-06-2017 reproduced below:


(a) Healthcare services by a

- clinical establishment,

- an authorised medical practitioner or

- paramedics


(b) Services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above.



1) 'Healthcare services' means any service by way of


  • illness,

  • injury,

  • deformity,

  • abnormality or

  • pregnancy 

– in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment.



  • hair transplant or

  • cosmetic or plastic surgery except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma


2) 'Clinical establishment' means

  • a hospital,

  • nursing home,

  • clinic,

  • sanatorium or

  • any other institution by, whatever name called,

that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy


  • in any recognised system of medicines in India,

or a place established as an independent entity or a part of an establishment to carry out

  • diagnostic or investigative services of diseases


3) 'Authorised medical practitioner' means a medical practitioner:


- registered with any of the councils of the recognised system of medicines established or recognised by law in India and


- includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force;


What is covered under the recognised systems of medicines?

As per section 2 (h) of the Clinical Establishment Act, 2010 following systems of medicines are recognised:  


  • Allopathy

  • Yoga

  • Naturopathy

  • Ayurveda

  • Homoeopathy

  • Siddha

  • Unani

  • Any other system of medicine that may be recognised by Central Government.


4) Paramedics have not been defined under this notification. However, they are trained medical professionals, for example nursing staff, physiotherapists, technicians, lab assistants etc. These persons are normally employees of diagnostic centre, nursing home, hospital or similar institutions. The services provided by them as employees will not be taxable. However, if they are working in independent capacity, the services provided by them will also not be liable to be taxed under GST, as the same are exempt under this notification.


PART 2 : Illustrative list of healthcare services that are exempted, and supplies that are taxable:

A) Exempted supplies:

i) Consultation charges;

ii) Bed, room, ICU, neonatal ICU, day care charges;

iii) Operation, procedures & nursing care charges;

iv) Laboratory and medical test charges;

v) Ambulance service;

vi) Blood nank Services

vii) Biomedical waste disposal service


B) Taxable supplies 

i) Sale of medicines; 

ii) Sale of Implants and artificial limbs;

iii) Renting of space for medical shop, canteen or parking facility;

iv) Commission received;


PART 3 : Rate of GST on Taxable Supplies


There are 3 different rates 5%, 12% and 18 % applicable depending on the item purchased.


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