Hospital Bills & GST: A Painless Guide to What's Taxed and What's Not

Why did the GST officer visit the hospital? To ensure the exemptions were in good health!

Getting a hospital bill is never fun. Between medical jargon and line-item charges, you're already overwhelmed — and then there’s GST. Wait, are surgeries taxed? What about that Rs.6,000 per day private room or the biryani in the hospital canteen?

Relax. While India’s Goods and Services Tax (GST) regime might seem daunting, the government has intentionally spared most core healthcare services from its scope. This article is your professionally curated yet simple guide to decoding hospital bills under GST.

The Golden Rule: Healthcare Services Are Exempt

The primary exemption provision is Serial No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. It exempts:

"Services by way of healthcare services by a clinical establishment, an authorised medical practitioner or paramedics."

Let’s break this down:

Examples of GST-Free Services:

• Doctor consultations

• In-patient surgeries

• Pathology tests (X-rays, MRIs, blood work)

• Emergency services

• ICU treatment

Composite Supply & Bundled Services: All-Inclusive, All-Exempt

Hospitals usually deliver bundled services — surgery, stent, anaesthesia, nursing, and room — all in one package. As per Circular No. 51/25/2018-GST, these are treated as "composite supplies" with the principal supply being exempt healthcare. Hence, the entire package becomes exempt from GST.

Example:

A patient undergoes heart surgery involving:

• Surgeon’s fee

• Anaesthesia

• Nursing care

• Stent insertion

If bundled, the entire charge is GST-exempt, even if it includes stents (which are taxable at 12% if sold separately).

Important: If you buy a stent from the hospital pharmacy without being admitted, 12% GST applies.

Room Rent: One Rule, One Exception

As clarified by Circular No. 177/09/2022-GST, room rent is part of the in-patient treatment and exempt, except in one case:

Exception: Non-ICU Room Rent Above Rs. 5,000/Day

If a non-ICU room exceeds Rs.5,000 per day per patient, 5% GST is applicable.

No Input Tax Credit (ITC) can be claimed on this GST.

ICU/CCU/ICCU Charges?

Always GST-free, regardless of price.

Practical Examples:

• Rs.4,800/day shared non-ICU room → GST-free

• Rs.6,500/day deluxe non-ICU room → 5% GST applicable

• Rs.9,000/day ICU → GST-free

This exemption applies only when the hospital is registered under the applicable clinical establishment law.

Hospital Food: Patient vs. Visitor — Who Pays GST?

As per Circular No. 32/06/2018-GST:

In-Patient Food

Food provided as part of a prescribed diet to admitted patients is considered part of healthcare and exempt from GST.

Visitor/Outpatient Food

Food sold in hospital cafeterias or canteens to visitors and outpatients is taxable at 5% GST (without ITC).

Hospitals must maintain separate records for:

• Taxable food (canteen sales)

• Exempt food (in-patient diet)

ITC Treatment:

• ITC allowed on inputs for canteen food.

• ITC not allowed for exempt in-patient food services (Section 17(5) of CGST Act).

Pharmacy Sales: Who Buys Matters

GST on medicines and devices in hospitals depends on whether the buyer is admitted or not.

In-Patient Pharmacy

Medicines, syringes, implants, and consumables supplied as part of in-patient treatment are GST-exempt under bundled healthcare.

Outpatient/Walk-in Pharmacy

• General sale to OPD patients or visitors attracts standard GST:

• 5% on drug formulations

• 12% on medical devices

• 0% on essential life-saving drugs (e.g., insulin)

Hospitals may need a separate GST registration or accounting for such taxable pharmacy operations.

Cosmetic Procedures: The Taxable Side of Beauty

Here’s where the exemption ends and tax begins.

Purely cosmetic procedures that aren’t medically necessary are taxable at 18% GST.

Examples:

• Hair transplant (cosmetic) → Taxable

• Teeth whitening → Taxable

Exempt if medically justified:

• Breast reconstruction post-mastectomy

• Burn scar revision

• Gender-affirming surgery (supported by medical documentation)

Supported by Advance Rulings like AAR Kerala – Cosmo Vision.

Quick Checklist: GST on Hospital Bills

Your Discharge Summary: What to Remember

Understanding GST on hospital bills ensures you’re not overcharged, and hospitals remain compliant. Here are the final takeaways:

• Core healthcare services are mostly GST-exempt.

• Bundled treatment = single exempt supply.

• GST applies to non-ICU rooms above Rs.5,000/day.

• Hospital food: in-patient meals = exempt; canteen food = taxed.

• Cosmetic procedures & outpatient pharmacy = taxable.

Final Dose of Humor

Patient: "Doctor, will GST be charged on my brain surgery?"

Doctor: "Only if you’re thinking about it cosmetically!"

Key Legal References:

• Notification No. 12/2017-Central Tax (Rate)

• Circular No. 51/25/2018-GST

• Circular No. 177/09/2022-GST

• Circular No. 32/06/2018-GST

• Section 17(5), CGST Act, 2017

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.