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Discontinue GST exemption on healthcare services; allow input tax credit, FICCI tells FM Sitharaman

The incorporation of five percent GST on room rent exceeding Rs 5,000 per day will increase the expenditure of patients, says FICCI

July 04, 2022 / 07:24 PM IST
Representative image

Representative image

The Federation of Indian Chambers of Commerce and Industry (FICCI) has urged Finance Minister Nirmala Sitharaman to discontinue the healthcare services' exemption from the Goods and Services Tax (GST) so that healthcare providers can claim the Input Tax Credit (ITC).

“The hospital industry has made several requests to the government in the past for a zero-rating GST on healthcare services to enable the service providers to claim Input Tax Credit. Enabling this would not only ensure that the Input Tax Credit chain is intact but will also make compliances easier and ensure that the input taxes are not loaded into the cost of healthcare services,” said Sanjiv Mehta, President, FICCI in a letter to Sitharaman.

The FICCI president further said that the incorporation of five percent GST on room rent exceeding Rs 5,000 per day will increase the expenditure of patients.

“Further, the room rent is usually a part of the package rate for a treatment, and taxing only one component of the package will create confusion and lead to deconstructing of the packages, which is against the current practice being encouraged by the government,” he added.

Mehta further raised the issue of increased taxes levied by the GST Council on bio-medical waste treatment plants.


The letter pointed out that some hospitals have their own bio-medical waste treatment plants and levying a 12 percent GST will make the hospitals unable to claim the ITC, given that hospital services are exempted from GST.

Stating that the net impact of revised tax rates on inputs consumed by hospitals has increased in past few years, Mehta said the incremental cost is ultimately borne by the patients, which will not serve the intention of the government to provide affordable healthcare to all.

The letter from FICCI comes at a time when healthcare industry representatives have said that, by not allowing hospitals input tax credit, the government may sever the chain of credit.

Mehta further said that these taxes are increasing the cost of compliance for the hospitals and making the entire compliance process more perplexing.

“This will defeat the government’s intention of bringing about ease of doing business,” Mehta’s letter to FM Sitharaman read.

It may be noted that the 47th GST Council meeting decided to levy a five percent tax on hospital room rents (excluding Intensive Care Units) exceeding Rs 5,000 per day.

The recommendations made in the recent GST Council meeting also allowed the bio-medical waste treatment facilities to be taxed at 12 percent so as to allow ITC.

Meanwhile, the Association of Healthcare Providers (India) (AHPI) has also expressed disappointment over the proposals presented by the GST Council.

“These measures will increase burden on suffering patients who come for treatment of their ailments, and will be a deterrent of the dream to make quality healthcare affordable,” the AHPI statement said.
Ayushman Kumar Covers health and pharma for MoneyControl.
first published: Jul 4, 2022 07:17 pm
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