Further pruning of services exemption on card: Revenue Secretary

Revenue Secretary Tarun Bajaj on Tuesday said that further pruning of exemption list for services is next on agenda. He also ruled out according ‘ZERO’ rating for healthcare sector.

At the time of introduction, 81 categories of services were on the exemption list which was expanded further. Last week, GST Council recommended doing away with exemptions on some services, including those those provided by RBI, IRDA, SEBI, FSSAI, hotel accommodation priced up to ₹ 1,000/day and room rent (excluding ICU) exceeding ₹5,000 per day per patient, beside others. Still the exemption list is very long.

“In the 47th meeting, we have taken away a lot of exemptions but exemptions still remain, work needs to be done on that on the services side, we still have a large number of exemptions. The CBIC, GST Council and all of us in collaboration with the trade and industry will continue to work on that if we can prune this list of exemptions. While we need to provide exemption to certain categories, health sector for example, is one of them,” he said while addressing the event to five years of GST organised by CII here.

GST on room rent

Taking note of voices raised against decision to impose 5 per cent GST (without ITC) on room rent (excluding ICU) exceeding ₹5,000 per day per patient, he wanted to know how many hospital rooms are there in the country and out of those what are the percentage of rooms which are charging above ₹5,000. “I think it will be miniscule. So if I can spend ₹5,000 on a room, I can perhaps spend ₹250 on GST. This GST, which comes into a common pool, will be used for poor,” he said.

Explaining the reasons behind such a decision, he said this is in response to demand for doing away exemption or Inverted Duty Structure (higher duty on input and lower duty on output, resulting in more and more refund). “I don’t see any reason that there should be any such kind of messaging that 5 per cent GST on ₹5,000 plus non-ICU room is hitting affordable healthcare,” he said.

Industry body’s concern

On Monday, industry body wrote a letter expressing concern over 5 per cent GST on non-ICU room and 12 per cent GST on common bio-medical waste treatment facilities for treatment or disposal of biomedical waste. Industry argued that it will create complexity. It demanded doing away of exemption from healthcare services and bring in under ZERO rating, so that ITC could be availed.

Bajaj said: “When you calculate your package, you do costing part of it. Some of the medicines in the package also have a GST rate of 5 per cent or other items 12 per cent. You don’t do it manually, it can be software driven. You have to be sure what you are charging from customer. If It is more than ₹5,000 please go ahead with GST, if it is less than ₹5,000 don’t go for a GST.”

He also made it clear that ‘ZERO’ rating is only available for export. He felt that sectors such as education and other sectors which will demand that. “The Centre and States also need revenues to carry out expenditure and the more such kind of curve-outs we do, the burden on certain items will go up. So effort will be to spread the base, have lower rates and that’s how you go about,” he said. 

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