Key Takeaways
- Healthcare services by clinical establishments, authorised medical practitioners, and paramedics are fully exempt from GST under Entry 74 of Notification No. 12/2017-Central Tax (Rate). This covers consultations, surgeries, diagnostics, pathology, radiology, and all recognised systems of medicine.
- Hospital room rent (non-ICU) exceeding Rs 5,000 per day attracts 5% GST (without ITC) from July 18, 2022. ICU, CCU, NICU, and ICCU rooms remain fully exempt regardless of the daily rate.
- Cosmetic and plastic surgery for appearance enhancement is taxable at 18% GST (SAC 999722). Reconstructive surgery for congenital defects, injuries, or trauma remains exempt as healthcare.
- Medicines attract 5% GST (reduced from 12% under GST 2.0, effective September 22, 2025). A list of life-saving drugs for cancer and rare diseases is at 0% GST.
- Medical devices and equipment are at 5% GST (reduced from 12 to 18%). Includes surgical instruments, diagnostic kits, glucometers, and bandages.
- Food served to inpatients as part of treatment is exempt (composite supply). Hospital canteen food for visitors and staff attracts 5% GST.
- Ambulance services for patient transport are fully exempt from GST.
Is GST applicable on healthcare services in India? No. Healthcare services provided by clinical establishments (hospitals, nursing homes, clinics, diagnostic centres), authorised medical practitioners, and paramedics are fully exempt from GST under Entry 74 of Notification No. 12/2017-Central Tax (Rate). The exemption covers diagnosis, treatment, and care for illness, injury, deformity, abnormality, or pregnancy in any recognised system of medicine in India, including allopathy, Ayurveda, homeopathy, Siddha, and Unani (Notification No. 12/2017-CT(R), Entry 74).
The Goods and Services Tax (GST) framework treats healthcare as an essential service. Most medical services provided by hospitals, doctors, and diagnostic labs are exempt from GST. However, certain hospital charges, cosmetic procedures, and ancillary services do attract GST. For hospital administrators, clinic owners, and businesses that use healthcare services, understanding where the exemption ends and GST begins is critical for compliance and cost planning.
This guide covers every category of healthcare-related GST, from exempt clinical services to taxable room charges, medicines, devices, and ancillary supplies.
What Is Exempt: Core Healthcare Services
Entry 74 of Notification No. 12/2017-Central Tax (Rate) exempts healthcare services provided by three categories of providers:
- Clinical establishments including hospitals, nursing homes, clinics, sanatoriums, and diagnostic centres
- Authorised medical practitioners registered with any council of recognised medical systems in India
- Paramedics including nurses, physiotherapists, and other allied health professionals
What Qualifies as a Healthcare Service
The exemption notification defines healthcare services as any service by way of diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy in any recognised system of medicine in India. This includes:
- Outpatient consultations and follow-ups
- Inpatient treatment and surgical procedures
- Pathology, radiology, and diagnostic investigations
- Preventive health check-ups when part of clinical care
- Vaccinations and immunisations
- Physiotherapy and rehabilitation
- Ayurveda, homeopathy, Siddha, Unani, and naturopathy treatments
- Dental treatment (therapeutic, not cosmetic)
The exemption applies regardless of the hospital's size, ownership (government or private), or the patient's payment method (cash, insurance, or cashless).
Looking for expert help with GST on healthcare services India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
GST on Hospital Room Rent: The Rs 5,000 Threshold
From July 18, 2022, room charges in hospitals are no longer unconditionally exempt. Notification No. 03/2022-Central Tax (Rate) introduced a 5% GST on non-ICU room rent exceeding Rs 5,000 per day.
| Room Type | Daily Rate | GST Rate |
|---|---|---|
| General ward | Any amount | 0% (exempt) |
| Semi-private room | Up to Rs 5,000/day | 0% (exempt) |
| Semi-private room | Above Rs 5,000/day | 5% (without ITC) |
| Private/deluxe room | Up to Rs 5,000/day | 0% (exempt) |
| Private/deluxe room | Above Rs 5,000/day | 5% (without ITC) |
| Suite room | Above Rs 5,000/day | 5% (without ITC) |
| ICU | Any amount | 0% (exempt) |
| CCU | Any amount | 0% (exempt) |
| NICU | Any amount | 0% (exempt) |
| ICCU | Any amount | 0% (exempt) |
How the 5% GST Works
The 5% GST applies only to the room rent component, not to the entire hospital bill. Medical treatment charges, surgery fees, diagnostic charges, and doctor consultation fees remain exempt even if the patient occupies a room above Rs 5,000/day.
The hospital must issue a tax invoice for the room charges separately from the exempt healthcare services. The 5% rate is "without ITC," meaning the hospital cannot claim input tax credit on any goods or services used for providing those rooms.
Worked Example
A patient is admitted for 5 days in a private room at Rs 8,000/day:
| Component | Amount |
|---|---|
| Room charges (5 days x Rs 8,000) | Rs 40,000 |
| GST at 5% on room charges | Rs 2,000 |
| Surgery and treatment charges | Rs 2,50,000 (exempt) |
| Diagnostic charges | Rs 15,000 (exempt) |
| Doctor consultation | Rs 10,000 (exempt) |
| Total bill | Rs 3,17,000 |
Only Rs 2,000 of GST is payable on the entire Rs 3,15,000 bill. The medical services remain fully exempt.
Cosmetic Surgery vs Therapeutic Surgery
The healthcare exemption draws a clear line between therapeutic and cosmetic procedures.
Comparison
GST on Surgery: Therapeutic vs Cosmetic
Therapeutic procedures are exempt; cosmetic procedures attract 18% GST
| Parameter | Therapeutic (Exempt) | Cosmetic (18% GST) |
|---|---|---|
| Reconstructive surgery after accident | 0% GST (exempt) | |
| Cleft palate/lip repair | 0% GST (exempt) | |
| Burns reconstruction | 0% GST (exempt) | |
| Cataract surgery | 0% GST (exempt) | |
| Rhinoplasty (cosmetic) | 18% GST (SAC 999722) | |
| Liposuction | 18% GST (SAC 999722) | |
| Hair transplant | 18% GST (SAC 999722) | |
| Botox / dermal fillers | 18% GST (SAC 999722) | |
| Teeth whitening (cosmetic) | 18% GST (SAC 999722) |
Takeaway: If the procedure restores anatomy or function damaged by congenital defects, injury, or disease, it is therapeutic and exempt. If it enhances or alters appearance for aesthetic purposes, it is cosmetic and taxable at 18%.
Source: Notification No. 12/2017-CT(R), Entry 74; CBIC Circular on healthcare services
The distinction matters for hospitals that perform both types of procedures. A multispecialty hospital doing reconstructive surgery (exempt) and cosmetic rhinoplasty (taxable) must maintain separate accounting and invoicing for the taxable procedures.
GST on Medicines and Medical Devices (Post-GST 2.0)
The GST 2.0 reforms effective September 22, 2025 significantly reduced GST on medicines and medical devices.
Medicines
| Category | Old Rate | New Rate (Sept 22, 2025) |
|---|---|---|
| Life-saving drugs (cancer, rare diseases) | 5 to 12% | 0% (select drugs) |
| General medicines and formulations | 12% | 5% |
| Ayurvedic and homeopathic medicines | 12% | 5% |
| Pharmaceutical job work | 12% | 5% |
Medical Devices and Equipment
| Category | Old Rate | New Rate (Sept 22, 2025) |
|---|---|---|
| Surgical instruments and apparatus | 18% | 5% |
| Diagnostic kits and reagents | 12% | 5% |
| Glucometers | 12% | 5% |
| Bandages, gauze, wadding | 12% | 5% |
| Surgical gloves | 12% | 5% |
| Spectacles and lenses | 12% | 5% |
| Medical-grade oxygen | 12% | 5% |
| Thermometers | 18% | 5% |
These reductions were recommended by the 56th GST Council and operationalised through amendments to Notification Nos. 01/2017 and 02/2017-Central Tax (Rate).
Looking for expert help with GST on medicines India 2026? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant end-to-end: filings, notices, and advisory, all in one place.
Food Services in Hospitals
GST on hospital food depends on who receives the food and how it is supplied.
Inpatient food (as part of treatment): When food is supplied to admitted patients as part of the healthcare package, particularly when prescribed by the treating doctor, it is treated as a composite supply where the principal supply is exempt healthcare. No GST applies.
Hospital canteen food (for visitors, staff, attendants): Food prepared and served in a hospital canteen to non-patients attracts 5% GST. This follows the general canteen service rate under Entry 7A of Notification No. 11/2017-Central Tax (Rate).
Outsourced food to hospitals: When an external caterer supplies food to a hospital on a contractual basis, the supply attracts 5% GST regardless of whether the food is ultimately served to patients or others. The caterer must charge 5% GST on the invoice to the hospital.
Ambulance and Patient Transport
Ambulance services for patient transport are fully exempt from GST under Entry 74(b) of Notification No. 12/2017-Central Tax (Rate). The exemption covers ambulance services provided by hospitals, standalone ambulance operators, and authorised service providers.
This includes:
- Emergency ambulance services (road ambulance)
- Air ambulance services
- Patient transfer between hospitals
- Ambulance services under government schemes (108, 102)
SAC Codes for Healthcare Services
| Service | SAC Code | GST Rate |
|---|---|---|
| Healthcare by clinical establishments | 999311 | 0% (exempt) |
| Healthcare by medical practitioners | 999312 | 0% (exempt) |
| Paramedic services | 999313 | 0% (exempt) |
| Ambulance services | 999319 | 0% (exempt) |
| Hospital room rent (above Rs 5,000/day, non-ICU) | 999311 | 5% (without ITC) |
| Cosmetic/plastic surgery (aesthetic) | 999722 | 18% |
| Diagnostic lab services | 999314 | 0% (exempt) |
| Veterinary services | 999321 | 0% (exempt) |
Healthcare services broadly fall under SAC Group 9993 (Human Health and Social Care Services).
ITC Rules for Healthcare Businesses
Since healthcare services are exempt from GST, hospitals and clinics face a unique ITC challenge.
No ITC on inputs used for exempt services. Section 17(2) of the CGST Act restricts ITC proportionally when a business provides both exempt and taxable supplies. A hospital that provides only exempt healthcare services cannot claim ITC on any of its purchases, including medical equipment, furniture, construction, or consumables.
Proportional ITC for mixed-supply hospitals. A hospital that has both exempt services (healthcare) and taxable services (cosmetic surgery, room rent above Rs 5,000/day, canteen) must calculate ITC proportionally under Rule 42 and Rule 43 of the CGST Rules.
Practical Impact
For a hospital with Rs 2 crore annual revenue where Rs 1.8 crore is exempt healthcare and Rs 20 lakh is taxable (room rent + canteen):
| Item | Annual Cost | GST Paid | ITC Eligible (10%) |
|---|---|---|---|
| Medical equipment | Rs 50,00,000 | Rs 2,50,000 | Rs 25,000 |
| Consumables (taxable portion) | Rs 10,00,000 | Rs 50,000 | Rs 5,000 |
| Building maintenance | Rs 20,00,000 | Rs 3,60,000 | Rs 36,000 |
| Total | Rs 6,60,000 | Rs 66,000 |
Only 10% of the input tax (proportional to the taxable revenue share) is recoverable. The remaining Rs 5,94,000 becomes a cost to the hospital.
Common Mistakes Healthcare Businesses Make
1. Charging GST on exempt healthcare services. Some hospitals and diagnostic labs incorrectly charge GST on lab tests, consultations, or treatments. These are exempt, and charging GST on exempt supplies is an offence under Section 122 of the CGST Act. If GST is collected from a patient on an exempt service, the hospital must deposit that amount with the government.
2. Not registering despite room rent GST. A hospital with room charges above Rs 5,000/day must register for GST if aggregate taxable turnover exceeds Rs 20 lakh (Rs 10 lakh in special category states). The exempt healthcare revenue is excluded from the aggregate turnover threshold, but the taxable room rent and canteen revenue count.
3. Claiming full ITC without proportional reversal. Hospitals with both exempt and taxable supplies must reverse ITC attributable to exempt supplies every month under Rule 42. Many hospitals claim full ITC and face demands during audits.
4. Misclassifying cosmetic procedures as therapeutic. The exemption is for treatment of illness, injury, deformity, or abnormality. Procedures performed solely for aesthetic enhancement do not qualify, even if performed by a licensed doctor in a clinical establishment.
GST Registration: When Is It Required for Healthcare Providers?
Providers offering exclusively exempt healthcare services (consultations, diagnostics, treatment) are not required to register for GST, regardless of turnover. However, registration becomes mandatory if:
- The provider has taxable supplies (room rent above Rs 5,000/day, cosmetic procedures, canteen services) exceeding Rs 20 lakh aggregate turnover
- The provider makes interstate taxable supplies (no threshold exemption for interstate)
- The provider is required to pay GST under Reverse Charge Mechanism (RCM) on specific inward supplies
Voluntary registration is permitted but not recommended for providers with exclusively exempt supplies, as it creates compliance obligations (filing GSTR-1 and GSTR-3B) with no ITC benefit.
How Tax Garden Helps Healthcare Businesses
Healthcare GST compliance involves managing the boundary between exempt and taxable supplies, calculating proportional ITC under Rule 42, filing returns for mixed-supply hospitals, and handling room rent GST invoicing. Tax Garden's compliance team manages the full cycle, from SAC classification to GSTR-3B reconciliation for hospitals, diagnostic centres, and multispecialty clinics across India.
Frequently Asked Questions
Is GST applicable on doctor consultation fees?
No. Consultation fees charged by authorised medical practitioners are fully exempt from GST under Entry 74 of Notification No. 12/2017-Central Tax (Rate). This applies to all recognised systems of medicine in India, including allopathy, Ayurveda, homeopathy, Siddha, and Unani.
What is the GST rate on hospital room rent?
Hospital room rent is exempt if the daily rate is Rs 5,000 or below. For non-ICU rooms exceeding Rs 5,000 per day, GST is 5% (without ITC) from July 18, 2022. ICU, CCU, NICU, and ICCU rooms are fully exempt regardless of the daily rate.
Is GST applicable on pathology and radiology tests?
No. Diagnostic services including pathology, radiology, and other investigative services provided by clinical establishments are exempt from GST. This includes blood tests, X-rays, MRI, CT scans, ultrasound, and all other diagnostic procedures.
Does a hospital need GST registration?
A hospital providing only exempt healthcare services does not need GST registration regardless of turnover. Registration is required only if the hospital has taxable supplies (room rent above Rs 5,000/day, cosmetic procedures, canteen) with aggregate taxable turnover exceeding Rs 20 lakh.
Is cosmetic surgery exempt from GST?
No. Cosmetic and plastic surgery performed for aesthetic purposes (appearance enhancement) attracts 18% GST under SAC code 999722. However, reconstructive or plastic surgery for congenital defects, injuries, burns, or trauma is exempt as it qualifies as healthcare.
Sources: Notification No. 12/2017-Central Tax (Rate), Entry 74 (healthcare exemption, ambulance, inpatient food); Notification No. 03/2022 and 04/2022-CT(R) effective 18 July 2022 (hospital room rent above Rs 5,000/day at 5%, ICU/CCU/NICU/ICCU exempt); 56th GST Council recommendations and CBIC/PIB releases of September 2025 (medicines and most medical devices reduced to 5%, select life-saving drugs to 0%, GST 2.0 slabs of 0/5/18/40 effective 22 September 2025); SAC 999722 (cosmetic and plastic surgery); Notification No. 11/2017-CT(R) (canteen food); CGST Rules 2017, Rule 42 (proportional ITC reversal). The current cosmetic-surgery rate and the official list of 0% life-saving drugs should be confirmed on cbic.gov.in before relying on them for a specific transaction.