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By: Dr. Sanjiv Agarwal
July 17, 2017
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Health care services have been specifically kept out ride the scope of GST net. This  is a fact and a perception too. These include services provided by medical establishments, clinics, medical practitioners, diagnostic centers etc.

The exemption has been provided vide the following entry No. 77 in Notification No. 9/2017-intergrated tax (Rate) dated 28.06.2017 .

"77 Services by way of health care services by a clinical establishment, an authorised medical practitioner or para-medics."

However, medicines sold by pharmacy are subject to GST at varied rates and so are items like stents, implants etc taxed.

The general rate of medicines etc, inter alia is covered under the following classification:

Chapter No.




Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 3 or List 4 appended to the Notification No.12/2012- Customs, dated the 17th March, 2012



9804 Specified drugs and medicines [i.e. List, 1 of Notification No. 12 / 2012-Central Excise, dated 17.03.2012 and List 3, 4 of notification No.12/2012- Customs, dated 17.03.2012] intended for personal use.



9804 Other drugs and medicines intended for personal use.


The Government has however, also taxed implants such as artificial limbs which is a necessary and integral part of health care services in relation to loss of limbs. Such artificial limb is recommended as a post health care to restore life  or to at least provide a workable living means so that one is not left to miseries. The GST shall be levied @ 5 percent (2.5% CGST + 2.5% SGST) or 5 percent IGST alongwith other items such as tricycle, wheel chair, walking aid etc. It is an irony that artificial limb has been equated to such equipments, though others are just aids. On the contrary, artificial limb is fitted to a body part.

The rates of GST on implants is @ 5% as per following classification:

  1. Coronary stents and coronary stent systems for use with cardiac catheters.
  2. Artificial kidney
  3. Disposable sterilized dialyzer or micro-barrier of artificial kidney
  4. Parts of the following goods, namely:-
  1. Crutches;
  2. Wheel chairs;
  3. Walking frames;
  4. Tricycles;
  5. Braillers; and
  6. Artificial limbs

Shockingly, all there items have been taxed but deserve to have been exempt fully. These are not luxury or cosmetic items meant for human consumption. Moreover, a large number of non-profit organizations are engaged in free or concessional supply of such goods.

There could be an argument that many big or corporate hospitals are also engaged in such supplies and charge a huge amount for this. But then, if we can tax hotels and restaurants at different tax rates based on categories on the basis of 'ability to pay', who stops the Government from adopting the same formula here. Tax big hospitals but spare such supplies generally. Tax officers, also human beings, must understand this and act upon. They are too answerable, atleast to God.  

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By: Dr. Sanjiv Agarwal - July 17, 2017


Discussions to this article



Hope your voice would reach the ears of Govt. and GST Council. Why to tax those who are already suffering ?

TMI should forward a copy of your article to the Chairperson of GST Council.

Dated: 18/07/2017

But based on the article published by Indian Express this tax rate is completely acceptable.

"An article in this newspaper (‘Taxing body parts’, IE, July 21, by Muralidharan) regarding GST at 5 per cent on aids and appliances for the disabled paints the GST in a poor light and seems to stem from an ignorance of the GST law. It is sad that such an ignorance has clouded the vision of a person who is otherwise so eminent in his field, being the Secretary of the National Platform for the Rights of the Disabled. I am also worried that such ignorance about taxation laws could cause harm to the interests of disabled persons. There are two reasons why aids and appliances for people have not been exempted from the GST.
First, it needs to be clarified that under the GST, the most beneficial rate of tax on any item is 5 per cent. Aids and appliances for disabled people, like wheelchairs, talking books, assistive listening devices and implants for the severely physically challenged, are taxed at this rate. This allows the suppliers of these items to claim an input tax credit for the GST paid on the inputs (raw materials) and input services used for supplying these items.
Most of the inputs (raw materials) and input services are in the 18 per cent GST rate category. Some of the sophisticated electronic inputs are under the 28 per cent rate. Thus, effectively, the entire 5 per cent GST levy on the aids and appliances for the disabled people will be offset against the input taxes, leading to zero effective tax on these items.
No supplier of these items will pay GST from his pocket and the input tax credit will always be more than sufficient for discharging the GST liability. Not only that, as most of the inputs and input services have a GST rate of 18 per cent, the supplier will always have surplus credit available in her/his account and he/she will be able to claim a cash refund for such input tax credit lying in his account every quarter. So, in fact, GST will become a money spinner for the suppliers of these items.
It also needs to be understood that under the GST, input tax credit or refund is not available for those goods on which the GST rate is zero percent. Thus, if the GST rate had been kept at zero per cent for these items, the suppliers of these items would not have been able to avail of the input tax credit. This would have made these items expensive, as the GST component of the cost of inputs and input services would have been added to the cost of the aids and appliances for the disabled by manufacturers and traders.
Thus, by keeping the GST rate at 5 per cent on these aids and appliances, the GST Council has wisely promoted the interests of disabled persons. And as a corollary, Muralidharan’s prescription of keeping the GST rate at zero per cent on these aids and appliances would make these items expensive and, thereby, would unintentionally end up harming the interests of the disabled persons.
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Secondly, if such goods were exempt from GST, then on imports of similar items too, the corresponding integrated GST would have to be kept at zero per cent. This will increase the competition for domestic manufacturers of these items, as they will not be able to avail the input tax credit on the inputs and input services used for the manufacture of items for the disabled, which in turn will increase their cost and make them non-competitive with respect to imported aids and appliances. This is against national interest, against Make in India and would result in a loss of jobs in the units of the Indian manufacturers.
I hope and pray that the ignorance of well intentioned and committed persons like Muralidharan wouldn’t result in the GST Council exempting the aids and appliances for disabled people from GST and thereby harming their interests."

By: Antony Edison
Dated: 26/07/2017


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