05.07.2022: Impact of 5% GST on non-ICU hospital rooms not significant: Revenue Secretary

The 5% GST on non-ICU hospital rooms that cost more than 5,000 will not have a significant impact on the affordability of healthcare for a significant portion of the population, said Revenue Secretary Tarun Bajaj.

In response to industry arguments, Bajaj also rejected the proposal for zero-rating for the healthcare sector, stating that such “carve-outs” could lead to similar requests from other sectors, including education, and increase the taxation of other things covered by the GST net.

In a letter to the finance ministry on July 4, the Federation of Indian Chambers of Commerce & Industry (FICCI) stated that the 5% GST on non-ICU hospital rooms over 5,000 would raise the price of healthcare services. On June 27, the GST Council eliminated the exclusions for this group of hospital rooms.

Speaking at an interactive session hosted by the industry chamber CII, Bajaj claimed that few hospitals in small towns would charge rent for non-ICU rooms of 5,000 or more per day.

“I don't know there would be hospitals in smaller towns like Panipat or Meerut where the hospital rooms would be costing 5,000 or above. I would also like 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 (sic),” Bajaj said.

The secretary said he was “quite perplexed” by the contention that the levy would be a bolt on affordable healthcare.

“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, adding in case of a package deal for a treatment, the IT software can easily calculate the GST portion on the room rent.

“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,” Bajaj said, adding the effort under GST is to widen the tax base so that tax rates can be lowered going forward.

Source: LiveMint

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