Guide
Does GST apply to hospital bills in India? What a patient receipt should show
By Velagapudi Dhanvin Raj7 min read
"Do we charge GST?" is one of the first questions a hospital owner asks about billing software, and the honest answer is: for most of what a hospital does, no, but not for everything. Getting it wrong in either direction costs money, so it is worth understanding the shape of the rules before you configure anything.
This is general information, not tax advice. GST rules and notifications change, and what applies to you depends on what you charge for. Confirm everything below with your chartered accountant and the current text of the notifications.
The short version
Health care services provided by a clinical establishment, an authorised medical practitioner or a paramedic are exempt from GST. This comes from a notification under the CGST Act, number 12/2017, and covers hospitals, nursing homes, clinics and standalone diagnostic units. So a consultation, a procedure and an in-patient stay are, in the usual case, not charged GST.
Services by senior doctors, consultants and technicians engaged by the hospital are covered too, whether they are employees or not, according to a CBIC circular from February 2018.
That is why many hospitals bill most of their work with no GST at all.
Where GST can still apply
The exemption has edges, and these are the ones hospitals most often meet:
- Room rent above Rs 5,000 a day. From 18 July 2022, charges for a hospital room above Rs 5,000 a day are taxable at 5%, with no input tax credit. ICU, CCU, ICCU and NICU beds are not caught by this limit.
- Medicines for outpatients. Medicines, implants and consumables supplied to a patient who is admitted are generally treated as part of the composite health care service, and so exempt. Medicines sold to outpatients are commonly treated as a separate supply that is taxable. This is an area where hospitals have faced questions, so document clearly what is exempt and what is not.
- Cosmetic and plastic surgery. Taxable, except reconstruction of body parts affected by a congenital defect, developmental abnormality, injury or trauma.
- Things that are not health care. Canteen food sold to visitors, retail pharmacy sales to the public, and similar items are taxable like any other supply.
If your hospital has a pharmacy, a cosmetic department or premium rooms, you will probably have a mix of exempt and taxable lines on your bills.
What the receipt needs to show
Two different documents come up here, and the difference matters:
- A tax invoice is issued for taxable supplies. Rule 46 of the CGST Rules lists what it must carry: the supplier's name, address and GSTIN, an invoice number that is unique for the financial year, the date, the recipient's details (with more detail for larger values), the description and HSN or SAC code, the taxable value after discounts, the rate and the tax split into CGST and SGST (or IGST for supplies between states), and a signature.
- A bill of supply is used instead when what is supplied is exempt.
When one patient's bill has both exempt and taxable items, how you document it is a question for your accountant. A good receipt makes the choice easy by keeping the lines, the rates and the totals clear.
Whatever else you do, a receipt should read well to a patient: your hospital's name and address, your GSTIN if you are registered, a receipt number that never repeats, the date, the patient's name, each service with its price, any discount, the tax if there is any, the payments received and the balance.
Three habits that save trouble
- Set the rate per service, not per bill. A consultation is 0%, a premium room might be 5%, an outpatient item might be 12%. If your software only allows one rate for the whole bill, it will be wrong for one of them.
- Apply discounts before tax. A discount on the whole bill should reduce the tax too. Check how your software does this; some spread it across lines, some do not.
- Keep GST registration in the right place. GST registration is per state. A hospital group with branches in two states, or in a union territory such as Daman, may need a different GSTIN for each, and each branch's receipts should carry the right one.
How Amma Health handles it
Everything defaults to no GST. If you do nothing, bills carry no tax. When you decide something is taxable, you set a GST rate on that service in your price list, with an optional HSN or SAC code, and you can change it on a single bill line. A discount on the whole bill is spread across the lines so the tax goes down with it, and the receipt shows the tax as CGST and SGST. You can set a GSTIN for the hospital and a different one per branch, and choose which details your receipts show.
What it does not do is decide what is taxable for you. That decision is yours and your accountant's, and the software follows it. If you want to see how a bill looks, the billing page shows a real receipt.
Sources and further reading
These are secondary sources written by tax professionals. Check the current notification text on the CBIC website before relying on any figure.