The government may bring certain healthcare services under the GST net, touching upon a sensitive area, as it looks to give a leg up to revenue mobilisation hit hard in the ongoing economic slowdown.
Official sources said the Finance Ministry, which had deliberations with the state governments on measures to boost GST revenue, is likely to recommend bringing premium healthcare services under the GST net with rates of either 12 or 18%.
These could include high value implants and medicines given to patients who are taking premium services from a healthcare service provider (hospitals, nursing homes). The taxable items may also include use of premium room and food and beverage services by patients.
All healthcare services by a clinical establishment or authorized medical practitioner by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy are currently exempt from GST. However, hair transplant or cosmetic or plastic surgery does not get exemption and is taxed.
“Healthcare is a vast area and certain services border on luxury or may not be essential to save the life of a patient. These may be considered for higher duty if the GST Council is unanimous on expanding the scope of taxation of healthcare services beyond hair transplants and cosmetic surgery,” said a state government official actively involved with the Council.
The GST Council is meeting on 18 December to take stock of the evolving situation where lower growth in GST collections has pushed the Centre to delay paying compensation to a few state governments as per agreed framework of new indirect tax regime. The Centre has to ensure 14% growth in baseline GST collections every year and meet any shortfall.
Also, the entire healthcare services at hospitals may be given a threshold in terms of actual spent for availing of the service. If that spend is beyond a prescribed threshold, GST could be charged on such services that get complete exemption at present. This would mean that if a patient at a hospital is availing of room services in premium category, the same could be taxed. The same principle may apply for implants and other high value specialised consultancy services.