In the days that have passed since the above announcement, the imposition of the new tax has drawn much criticism from the industry, while government officials have tried to defend their position.
The industry concerns of stakeholders, including hospital associations, are twofold:
- GST on hospital beds will increase the cost of healthcare for patients
- GST on hospital beds will introduce compliance and related challenges for the healthcare sector, which is otherwise exempt from GST.
Health sector is exempted from GST. Services through a clinical establishment, health care services by an authorized physician, or paramedics; are exempt from GST. This means that as of today, generally, a visit to a doctor or a hospital does not attract GST for health care services.
affordability factor
Industry players are of the view that 5% GST on hospital beds should be ‘reassessed’ and treated as an additional burden on the health care cost of the patient.
The above approach stems from the fact that over 62% of the population uses private health care services for patient care. There are many qualitative factors like comfort and convenience. Any additional tax on these services deprives the public of the option of being able to afford quality health services.
On a room rent of Rs 5000 per day, the GST amount will be Rs 250. The hospital room rent (without GST) for 2 days would be Rs 10,000 and the GST on that would be Rs 500. A person will have to pay Rs 10,500. 2 days hospital stay (including GST). In case of hospital stay, like any other services attracting GST levy, the longer the hospital stay, the higher will be the quantum of GST amount.
It is no secret that the healthcare industry is different from any other consumer-facing industry and the government needs to take a look at various factors, with adequate attention to detail, before implementing any policy-level changes. is required.
Given this and the fact that hospital stay is not an expense of a luxury, but a necessities in times of medical crisis, one view is that there are different slabs of amount to be charged from the customer depending on the services the hospital offers. GST cannot be levied, as is the case with other consumer-facing industries.
compliance and complexity
Broadly speaking, hospital services in India are currently exempted from GST levy. However, this will change with the introduction of 5% GST on non-ICU hospital rooms whose room rent exceeds Rs 5000 per day. Now, according to industry representatives, this will lead to confusion for hospitals, as hospitals will have to revisit their existing practice of billing room rent as part of the package offered by hospitals for treatment or services .
In addition, hospitals will have to incorporate appropriate changes in their billing and other software systems to trigger the GST levy where room rent exceeds Rs 5,000 per day. In addition, hospitals will need to ensure that the same is duly reported in the monthly GST filing and other related GST compliances are duly discharged.
conclusion
Despite some adverse reactions, the government is holding on to the apprehensions as unnecessary.
The argument made by the government here is that since 5% GST is to be levied only on rooms costing Rs 5000 or more per day, the percentage of rooms covered by it will be ‘small’ and such rooms will be considered at the rental level. bears such charges. Hence, such taxation will not affect the underprivileged.
With the above said, there is no doubt that there is merit in the arguments of both the sides. While the industry is concerned about the increased costs and complexities, the government has to widen the GST coverage considering the macro side of things.
Whatever may be the case, a dialogue should be initiated among all concerned to better understand the concerns and to ensure the resolution as possible.
(Abhishek Jain, Partner, Indirect Taxes, KPMG in India and Oshank Mittal, Chartered Accountant)