Supply of medicines etc to in-patients of a hospital to be composite supply, exempted from GST
Supply of medicines, drugs and consumables along with food in the course of providing health care services to in-patients being treated in a hospital will be treated as a composite supply under the GST regime. Accordingly, it will be exempted from GST, Karnataka’s Authority for Advance Ruling (KAAR) has ruled.
Bengaluru-based, Spandana Pharma moved to AAR to seek an advance ruling on whether the supply of medicines, drugs and consumables used during treatment of in-patient, admitted to the hospital to be treated as a ‘composite supply’ and qualify for exemption. Also, they wanted to know will food served to the same patient be part of the composite supply.
Central Board of Indirect Taxes and Customs (CBIC) define composite supply as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination, which are naturally bundled and supplied in conjunction with each other in the ordinary. The tax rate of the principal supply will apply to the entire supply.
After going through all the arguments and facts submitted, KAAR took note of the definition of healthcare. The tax notification defines ‘healthcare 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. However, it does not include hair transplant or cosmetic or plastic surgery barring exceptional situations.
