Impact of GST on healthcare

The Indian Healthcare Industry is now among of the major sectors with respect of revenue and employment. Recently, the Government of India decided for the implementation of GST from July 1, 2017, which subsumed various taxes of the complex tax system in the country into one uniform tax system. Healthcare sector includes both supply of goods like pharmaceutical companies and supply of services like Hospital, clinics, Diagnostic centres etc. Any increase in cost of these goods or services will directly impact consumers on day to day basis and will make essential supply expensive.

Major Concern

Under GST regime, the health care services like services provided by clinical establishment are covered under the bracket of exempt supply & as per law if the output supply is exempt then Input tax credit shall not be available. Also when Output supply is not taxable then refund of taxes paid on inward supply of goods and services is not allowed. Due to this  all the taxes levied on Input services or goods taken by health care services providers like Hospitals, clinical establishment and paramedics shall become part of cost.

There is no GST for Healthcare service supplier but there are services and some products with GST rate ranging from 5 to 28 per cent that have been fixed by GST council. The entire premise on which GST is based is seamless flow of input credit from supplier to supplier. For healthcare sector this chain is broken and ultimate cost of service shall increase due to this.

Further, in healthcare sector capital investment on infrastructure, equipments and other facilities is so huge and increased more by GST, that any further cost will only put pressure on consumer.

For addressing this issue, the GST structure should be either dispose of the GST on inward supply of goods or services to healthcare service sector or tax the healthcare service at may be 3% or 5% so that it will bring in a refund of the accumulated credit. If this is implemented, it would prove to be the biggest advantage for the healthcare sector and would act as a booster for the growth of healthcare industry and benefit of public at large.