There is distress in the sector and among the people in the medical sector because if the room rent of the hospital excluding ICU would surpass a limit of Rs 5000 per day then a 5% GST would be levied on it, says the GST council. While a 12% levy would be imposed on the bio-medical waste treatment plants.
In the 47th GST council meeting the decision to impose a 5% GST opts. In the identical meeting, another decision taken was that no ITC shall be offered on it.
This will come into force from 18th July.
Federations seek centres to verify their decision
The Federation of Indian Chambers of Commerce and Industry (Ficci) writes to Finance Minister Nirmala Sitharaman, asking for zero GST for the health care services to enable the service providers for claiming the Input Tax Credit.
Ficci specified that Imposing a 5% room rent would not raise the cost of the healthcare services to the patients however it lefts the hospital in a confusion as the room rent comes under the package rate for the treatment. The same would be directed to deconstructing the packages which are opposite to the current exercise as motivated by the government.
According to Gautam Khanna, Chair, FICCI Health Services Committee & CEO, P D Hinduja Hospital & MRC, “This 5 per cent GST will hurt the patients. Hospitals will pass on the additional burden of 5 per cent to the patients.”
A confirmation of their decision should be taken by the government. The same would load the patients with the hospitalization cost which will increase in the coming days.
FICCI in its letter articulated that hospitals have asked the government various times for nil GST on health care.
Hospitalization costs to rise
A patient will need to file Rs 5250 if his/her expense for the room gets increased from Rs 5000.
The industry body mentioned that the hospitals pose their own bio-medical waste treatment plants. When a 12% GST would be levied the hospitals will not able to claim the GST input tax credit, mentioning that the hospital would get exempted from the GST.
These taxes would increase the cost of compliance for the hospitals, opposing the preference of the government for ease of running the business.
Dr D K Gupta, Chairman of Felix hospital said that the middle class will get hit by the same decision as 62% of the patients furnish the bills with their own money. Various insurance firms were bankrupt during the time of the pandemic and that would pose a bigger impact.
Gautam Khanna, also said, “The hospitals won’t get input credit on the additional five per cent tax proposed by the GST Council meeting. This will be passed on to the patients, which will be an additional burden for them.”
Center is firm on its decision
Revenue secretary Tarun Bajaj opposed the decision. He claimed the concerns asked are baseless.
According to Tarun Bajaj, “There is a messaging that 5 per cent GST on Rs 5,000-plus non-ICU room is hitting affordable healthcare, I don’t buy this argument. In case of a package deal for treatment, the IT software can easily calculate the GST portion on the room rent.”
You are needed to assure what you levy from the customer. When it exceeds Rs 5,000, you should proceed forwards with the GST, if it is lower than Rs 5000 then do not charge any GST.
From the example “I don’t know there would be hospitals in smaller towns like Panipat or Meerut where the hospital rooms would be costing Rs 5,000 or above. if one can spend Rs 5,000 on a room, one can perhaps spend Rs 250 on GST. This GST, which comes into a common pool, will be used for the poor.”
There are very few hospitals that charge Rs 5000 in our country.
