Service tax on hospital services on contract?
This query is : Resolved
06 January 2017
A government hospital signs a MOU with the private hospital that private hospital provide services in the name of govt. hospital. The income from hospital provided being distributed between govt and private in 9:91. The private hospital make a company which in place of private hospital provide services to Govt. hospital. The invoice is raised to Private hospital. Whether the invoice raised by company to private hospital is chargable to service tax?
06 January 2017
No service tax applicable on health services provided. Service tax is payable on 9% payment made to govt being in the nature of commission.
CA Suresh Jain
(Expert)
06 January 2017
Let me first narrate the transaction :-
1. Agreement between Govt. and a private hospital for providing hospital services to public,
2. The private hospital created a Company who is managing the Hospital services
3. bills for medical services to public are raised by the private hospital and not by the Company
4. Company incur all expenses for running of hospital but collection of charges from public in the name of private hospital because agreement of Govt. is with private hospital
5. Company raises the bill on monthly basis
On the above premise, I am of the opinion that the service provided by the Company to the private hospital does not fall under the category of "Health care services by a clinical establishment, an authorised medical practitioner or para-medics" and hence not exempted
1. Agreement between Govt. and a private hospital for providing hospital services to public,
2. The private hospital created a Company who is managing the Hospital services
3. bills for medical services to public are raised by the private hospital and not by the Company
4. Company incur all expenses for running of hospital but collection of charges from public in the name of private hospital because agreement of Govt. is with private hospital
5. Company raises the bill on monthly basis
On the above premise, I am of the opinion that the service provided by the Company to the private hospital does not fall under the category of "Health care services by a clinical establishment, an authorised medical practitioner or para-medics" and hence not exempted
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06 January 2017
Under which section it is taxable and how to save tax in this situation
CA Suresh Jain
(Expert)
06 January 2017
For a correct picture you need to share the agreements and detail of transactions amongst all three activities
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