NEW DELHI: The 5% GST rate on non-ICU hospital rooms with rental value above Rs 5,000 per day would lead to inflation and would increase the cost for patients, as per the healthcare industry. They say it will defeat the government’s objective of providing affordable healthcare services to all.
The tax imposition of 5% is also without the input tax credit, has been heavily criticized by the industry. The decision of levying GST on such rooms was taken by the government last month during the 47th GST Council meeting in Chandigarh.
“The decision to impose a 5% GST on hospital room rent above Rs 5,000 per day (excluding ICU) would add to inflationary pressure to some extent and increase the burden. If there is a GST on room rent then tax credit should be allowed for the hospital sector,” said Dr Shankar Narang, COO Paras Healthcare.
“As GST is not payable on healthcare services, service providers are not eligible to avail credit on the input taxes paid by it, which ultimately becomes a cost for the service provider,” Narang added. Dr. Aashish Chaudhry, managing director at Aakash Healthcare, Dwarka, also echoed the same observation. He said the general public will be adversely affected by the imposition of 5% GST without an input tax credit.
“I think to make healthcare accessible and inexpensive for the last man standing, it should receive the most subsidies and GST exemptions. With this tax, hospital expenses would rise, and many patients might face difficulties,” stated Dr. Chaudhry.
According to a study by EY for healthcare industry body NATHEALTH, the sector carries an embedded tax above 6% of the annual turnover.
This is also one of the few sectors where the embedded tax burden post-GST period is higher than pre-GST times on account of limited pass-through available to the imports under the earlier State VAT regime.
GST on hospital room
It will defeat the government’s objective of providing affordable healthcare services to all.
The tax imposition of 5% is also without the input tax credit, which has been heavily criticized by the industry