A recent article claiming that GST officials are sending notices to hospitals with regard to doctors / consultants’ fees being taxable under GST is creating great unrest in the medical community. Healthcare, with some exemptions such as cosmetic surgery, medicines and some ancillary services such as food and equipment supplies, has largely been kept out of the GST net. Health insurance, however, is taxed at 18%.

The contention of the GST officials is in brief as follows: Hospitals do not require the services of consultants to function, consultants are therefore mere “intermediaries” and hence cannot claim exemption under GST. This is a complete and utter disregard towards facts and extremely disrespectful and offensive to medical professionals. Consultants attached to hospitals are required for every aspect of care of patients in the hospital, from admissions and emergency surgeries to declaration of birth and death. Only someone who is totally devoid of common sense can make a ridiculous claim that hospitals can function without consultant doctors.

Moreover, this issue has been already addressed by the GST Council. There is a detailed clarification from Ministry of Finance on applicability of GST on healthcare. The relevant sections are reproduced here for reference:

The reply to point 2 as above squarely covers the issue of consultations within the hospital. It is shocking that tax officials are sending notices to hospitals in flagrant violation of the circulars issued by the Ministry of Finance that have expressly clarified this matter.

We need a larger debate on whether healthcare should be exempt from GST or not, but that is a topic for another day. One hopes that better sense will prevail and any such notices that have been issued by tax officials will be withdrawn with immediate effect.