Under Tax Scrutiny: Can GST be levied on Implants and Medical Devices

New Delhi: An impending challenge for the hospitals is foreseen with the tax department scrutinizing the applicability of Goods and Services Tax (GST) specifically on medical implants such as stents and knee replacements, across the country.

Several hospitals across the country have received preliminary notice from taxmen seeking details. More hospitals are expected to receive the notice in the coming week. If the government moves to levy GST on implants it is expected that the move will likely hit the cost of surgery for Indian patients.

The Tax Department seems to be caught in a tangle. As per the current GST framework, medical services have been kept out of the purview of tax and there is no tax on healthcare services including surgeries, except for cosmetic ones. The perplexity lies whether an implant should be separately taxed when it is provided to the patient by the hospital, a concern which is still being scrutinized.

“The exemption given to healthcare services is broad enough to cover a variety of ailments/treatment and even extends to the transportation of the patient. A recent AAR ruling has clarified that even medicines provided to patients would be exempt and only medicines sold to out-patients would attract GST,” MS Mani, partner, Deloitte India told ET.

The daily reports that the Tax Department has now sought the financial details of drugs and implants provided to IPD patients from various hospitals from July 2017 and also wanted access to details of revenues of laboratories run by the hospitals. The notice further demanded, ”copies of invoices of implants purchased by the hospital and corresponding bill of supply”.

The move, however, if coming to reality will face likely to face objections from both hospitals and patients alike as it is expected that hospitals will pass on the extra GST costs to the patient leading to rise in the cost of treatment.

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