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Govt’s attempt to exempt healthcare services from GST is a good news

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While this shift is dramatic enough, I am glad that the GST council has decided to make the transition as smooth as possible for India

Under Goods and Services Tax (GST), healthcare services are referred to as any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy as per recognised systems of medicine in India. They also include services by way of transportation of the patient to and from a clinical establishment. Given this, the healthcare sector had speculated, debated and discussed about implications of the impending GST Bill. The decision of the Indian government to exempt healthcare services from GST has been good news for start-ups as well as established healthcare businesses. However, for the end-consumer the costs could rise, given the increase in input costs as proposed by GST. As per the GST regime, the tax rate for medical devices sector was pegged at 12 per cent, which could affect the overall cost structure of the healthcare chain.

Although hospital services are exempted from taxes under GST, the outsourced services, aesthetics and outpatient pharmacies are subject to GST imposition. In the pharmaceuticals landscape, the 5 per cent tax rate on life-saving drugs that treat diseases like malaria, HIV-AIDS, tuberculosis, and diabetes is expected to marginally increase the price of medicinal drugs, leading to a domino effect in the cost structures for healthcare sector. While this shift is dramatic enough, I am glad that the GST council has decided to make the transition as smooth as possible for India, by not moving the tax needle too drastically on the healthcare related goods and services segments.

Ameera Shah, MD, Promoter, Metropolis Healthcare

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