zero rating GST: FICCI bats for bringing healthcare under zero-rating GST

The exclusion of healthcare from the goods and services tax regime is leading to stranded input tax credit (ITC) according to the Federation of Indian Chambers of Commerce and Industry. In a letter to Finance Minister, Nirmala Sitharaman, the industry body has batted for a Zero rating Goods and Services Tax (GST) on healthcare services to enable the service providers to claim Input Tax Credit.

“Enabling this would not only ensure that the input tax credit chain is intact but will also make compliances easier and ensure that the input taxes are not loaded into the cost of healthcare services,” the FICCI letter said.

FICCI also red-flagged the recent recommendation of the GST council to levy 12% GST on bio-medical waste treatment plants, and 5% GST on Room rent (exceeding Rs.5000 per day).

According to FICCI, some hospitals have their own bio-medical waste treatment plants. In case a GST of 12% is levied, the hospitals will be unable to claim the ITC, given that hospital services are exempted from GST.

Further, in addition to increasing costs for patients, the 5% GST levy on room rent will create confusion for hospitals. FICCI said that the Room rent is usually a part of the package rate for a treatment, and taxing only one component of the package will lead to deconstructing of the packages.

It is estimated that these taxes are increasing the cost of compliance for the hospitals and making the entire compliance process more perplexing.

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