The Federation of Indian Chambers of Commerce and Industry (FICCI) has raised concerns regarding ineligibility of healthcare service providers to avail input tax credit (ITC) due to exclusion of the healthcare sector from the GST regime. 

In a letter written to the Finance Minister Nirmala Sitharaman, the industry chamber has recommended a “zero-rating GST” on healthcare services. “Enabling this would not only ensure that the input tax credit chain is intact but will also make compliances easier and ensure that the input taxes are not loaded into the cost of healthcare services,” the letter, written by FICCI President Sanjiv Mehta, stated.

Bio-medical waste

Pointing out to the recent recommendation of the GST Council to levy 12 per cent GST on bio-medical waste treatment facilities, the industry chamber stated that “hospitals who have their own bio-medical waste treatment plants will be unable to claim the ITC, given that hospital services are exempted from GST.”

It also said that the “incorporation of 5 per cent GST on room rent (exceeding ₹5,000 per day per patient) without ITC will go on to increase the cost of healthcare service to the patients.”

“Room rent is usually a part of the package rate for a treatment, and taxing only one component of the package will create confusion and will lead to deconstructing of the packages.Under Ayushman Bharat-PMJAY scheme and other health insurance schemes, the government has been encouraging the private sector to keep the patient informed of the cost of entire treatment through package rates,” the industry chamber added.

The industry chamber has, therefore, urged the government that “exemption of healthcare services from GST may be discontinued and the healthcare providers be allowed to avail the input tax credit.”

. “We would also like to highlight that over the past couple of years, the net impact of revised tax rates on inputs (goods and services) consumed by hospitals has increased, including the taxes on some of the medical equipment. As this incremental cost is ultimately borne by the patients, it will not serve the intention of the government to provide affordable healthcare to all,” it added.