Hospital Charges to In-Patients Treated as One Bundled Healthcare Service Under GST

The applicant, M/s. Laxmi Health Care Centre & ICCU, is a healthcare service provider operating a medical facility at Thane, Maharashtra. The applicant is registered under the CGST and MGST Acts and is engaged in providing healthcare services, including diagnosis, medical treatment and inpatient care.

In the course of rendering treatment to in-patients, the applicant recovers various charges such as pathological and radiological test charges, bed charges, charges for medicines and other consumables. These amounts are billed to patients under a common contract and invoice as part of inpatient medical treatment.

Seeking clarity on the GST implications of such recoveries, the applicant filed an application before the Maharashtra Authority for Advance Ruling to determine whether these charges constitute a single supply of healthcare service and whether the exemption available under Notification No. 12/2017-CT (Rate) dated 28 June 2017 applies to such bundled charges recovered from in-patients.

Main Issue: Whether charges recovered towards diagnostic tests, bed charges, medicines, and consumables during inpatient treatment constitute a composite supply of healthcare services and are eligible for GST exemption under Entry 74 of Notification No. 12/2017-CT (Rate).

AAR’s Decision: The Maharashtra Authority for Advance Ruling examined the nature of services provided by the applicant to inpatients and the manner in which charges are recovered. It noted that inpatient treatment is a continuous process beginning with admission and ending with discharge, during which various services such as diagnostics, accommodation, medicines and consumables are inherently linked to the principal supply of healthcare.

The Authority held that these components are not independent supplies but are naturally bundled and provided in conjunction with the principal supply of healthcare services. Therefore, the charges recovered towards pathological tests, radiological tests, bed charges, medicines and consumables form part of a single composite supply of healthcare service. Thus, GST is not payable on such charges recovered from in-patients.

To Read Full Judgment, Download PDF Given Below