Dr
K K Aggarwal, National President IMA
Indian
Medical Association (IMA) represents over 2.7 lakhs doctors practicing modern
medicine all over India having with 31 State branches and 1700 local
Chapters.
IMA welcomes
the Government’s initiative for bringing GST close to reality. While conveying
our best wishes for a successful transition to the GST regime, we humbly
request that Healthcare services offered by private entities be exempted from
GST.
Current
scenario: Healthcare services (Public & Private) are exempt from the
Service tax.
Presently,
healthcare services provided by all types of clinical establishments are exempt
from Service tax vide Entry No. 2 of the Mega Exemption Notification No.
25/2012-ST dated June 20, 2012. It should be noted that healthcare services
exempt under the Mega Exemption Notification are strictly defined to
cover diagnosis, treatment and care for illness, injury or deformity etc. No
exemption is available for treatment considered cosmetic such as aesthetic/beauty
enhancement purposes.
Further,
vide Notification No. 04/2014 – ST dated February 17, 2014,
services provided by cord blood banks by the way of preservation of stem cells
or any other service in relation to such preservation have also been accorded
specific exemption from Service tax by insertion of Entry No. 2A in the
Mega Exemption Notification.
Attention
is drawn specifically to Schedule IV of the Revised Model CGST/SGST Act, 2016,
containing an exhaustive list of activities or transactions undertaken by the
Central Government, a State Government or any Local Authority that shall be
treated neither as a supply of goods nor a supply of services. Para 3(iii) of
Schedule IV specifically gives exemption to healthcare services provided by a
Central Government or Local Authority or a Governmental Authority (it should be
noted that there is no mention of private players):
“3.
Services provided by a Government or local authority or a governmental
authority by way of:
(i)
any activity in relation to any function entrusted to a municipality under
article 243 W of the Constitution;
(ii)
any activity in relation to any function entrusted to a Panchayat under article
243 G of the Constitution;
(iii) health
care; and
(iv)
education”
In
this regard, the term ‘healthcare services’ as defined in Para 2 of the
Definitions under Schedule IV to the Revised Model CGST/SGST Act, 2016, has
been similarly worded as presently contained in the Mega Exemption
Notification:
“2.
Health care services means any service by way of diagnosis or treatment or care
for illness, injury, deformity, abnormality or pregnancy in any recognised
system of medicines in India and includes services by way of transportation of
the patient to and from a clinical establishment, but does not include hair
transplant or cosmetic or plastic surgery, except when undertaken to restore or
to reconstruct anatomy or functions of body affected due to congenital defects,
developmental abnormalities, injury or trauma”
Attention
is requested further to be drawn to the place of supply provisions contained in
Section 9 of the Revised Model IGST Act, 2016, for determining the place of
supply of services where the location of supplier of service and the location
of recipient of service is in India. Health services have been covered here
also to state that the place of supply of health service including cosmetic and
plastic surgery shall be the location where the services are actually
performed:
“(5)
The place of supply of restaurant and catering services, personal grooming,
fitness, beauty treatment, health service including cosmetic
and plastic surgery shall be the location where the services are actually
performed.”
The
Private Sector Healthcare Industry is expecting exemption to be granted to
healthcare services, in general, irrespective of the status of the service
provider, as exists in the current indirect tax regime. However, as we have
mentioned, the stated provisions in the Revised Model GST law create doubt
about the fate of exemptions for healthcare services provided by private
entities under the new GST regime.
Exemption
of GST to private sector shall result in following benefits:
a)
Avoid any increase in the cost of healthcare being provided by the
private sector in India
b)
Ensure affordable healthcare services in India
c)
Ensure a promising future for healthcare in India.
d)
Eradicate any possibility of dis-incentivizing future
investments in the private healthcare sector
e)
Combat inflation by reducing the cost of healthcare services,
which are otherwise exempt from duty/taxes.
f)
We would be grateful if you could grant us a personal hearing on
this matter for presentation of our concerns that have been briefly summarized
in this letter.
