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Service tax applicability on revenue sharing agreement between hospital and icu medical service provider

yusuf pasha (Business Analyst @ SMARTCFO SERVICES LLP) (31 Points)

09 December 2016

Hospital is billing to the patients & collecting amounts. This amount is being shared between hospital & ICU unit in the ratio of 15:85 respectively. ICU unit is a private ltd co. . hospital is providing infrastructure space to ICU unit & this unit provide services to the patients. my question is whether service tax is applicable on the revenue shared by ICU unit which is the pvt ltd co.? if yes please provide section details or circular no. or notification details. Thank you in advance.

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2 Replies

Rahul Mishra (studying) (34 Points)
Replied 09 December 2016

Hi syed,

Section 66b is charging section of finance act,1994,which provides that there shall be levied a service tax at the rate of 15% on the value of all services,other than those specified in negative list,provided or agreed to be provided in the taxable territory by one person to another for consideration and collected in such manner as may be prescribed.

in ur case icu unit which is different unit providing service to hospital fall within ambit of definition of service tax.

yusuf pasha (Business Analyst @ SMARTCFO SERVICES LLP) (31 Points)
Replied 09 December 2016

Hello rahul mishra,

ICU is providing service to the patients and in return patients are making payment to hospital. As per Mega exemption list, any health care services provided by clinical establishment are exempt from service tax. so income source is the same i.e. from patients. so my question is whether 85 % income distributed by hospital to ICU (pvt ltd co.) is taxable or exempt under S.Tax. provide any Case law if possible. Thank you.