The healthcare sector that has long been outside the indirect tax ambit continues to be exempted under GST as well. However, patients may end up paying higher medical bills and hospitalisation costs as GST applicable on expenses incurred by hospitals has gone up.
With disposables, drugs and reagents being bracketed under 12% GST, the cost of surgeries and other procedures (that involve use of disposables and reagents) will go up considerably. The old tax rate for these items varied between 2% to 5.5%, said C.N. Manjunath, director of Sri Jayadeva Institute of Cardiovascular Sciences.
Sameer Agarwal, chief financial officer, Manipal Health Enterprises Pvt. Ltd. (MHEPL ), said that under GST, the input costs of hospitals will increase as tax on services like housekeeping and security has increased. “If the input costs are high, hospitals will have no other go but to pass on the increased costs to patients,” he said. “The only relief is that luxury tax on room charges has been subsumed into GST and hence, patients will no longer be charged a separate luxury tax,” he said.
Jagannath M.S., chief financial officer, Columbia Asia Hospitals, said the overall cost of healthcare will increase as tax on inputs of hospitals including equipment, accessories and services such as maintenance of equipment and labour contracts, will rise.
“We have represented to the government through several business forums to either levy GST at a lower rate or to provide ‘zero’ rate for healthcare services. This will help healthcare providers offset any input credit or to claim refund of GST and hence, will keep healthcare costs at the existing levels,” he added.
Diagnostic services to cost more
While healthcare is exempt on taxes, the flip side is ancillary medical procedures and diagnostics, which play a key role in treatment, have been put under the 12% and 18% slab. This means, cost of diagnostic services will go up considerably.
U.S. Vishal Rao, head and neck surgeon at HCG Cancer Centre, said equipment such as furniture, examination chair and operating table will now fall in the 18% bracket.
