The 5% GST on non-ICU hospital rooms costing more than Rs 5,000 would have no influence on affordable healthcare for a huge number of people, according to a top official on Tuesday.
Responding to industry comments, revenue secretary Tarun Bajaj rejected the proposal for zero-rating for the healthcare business, stating that such “carve-outs” may create similar requests from other sectors, such as education, and put increasing pressure on taxation of other products in the GST net.
In a letter to the finance ministry on Monday, industry association Ficci stated that a 5% GST on non-ICU hospital rooms over Rs 5,000 will raise the cost of healthcare services. Last Monday, the GST Council withdrew exclusions for this type of hospital accommodation.
During an interactive session hosted by the industry chamber CII, Bajaj stated that there are few hospitals in small towns that charge Rs 5,000 or more per day for non-ICU rooms. “I’m not sure if there are hospitals in smaller places like Panipat or Meerut where hospital rooms cost Rs 5,000 or more. I’d also like to know how many hospital rooms there are in the country, and what proportion of those rooms charge more than Rs 5,000. I believe it will be insignificant. So, if I can spend Rs 5,000 on a hotel, I might be able to save Rs 250 on GST. This GST, which is collected in a common pool, would be utilized to help the impoverished “Bajaj stated.
The secretary was “very confused” by the claim that the charge would be a stumbling block to cheap healthcare.
“I don’t see any reason why there should be any type of messaging that 5% GST on Rs 5,000-plus non-ICU room is affecting affordable healthcare,” he said, adding that in the case of a treatment package agreement, the IT software can simply calculate the GST percentage on the room rent.
“You must be certain of what you are charging the consumer. If it is more than Rs 5,000, please go with GST; if it is less than Rs 5,000, please do not proceed with GST “According to Bajaj, the objective of GST is to broaden the tax base so that tax rates may be reduced in the future.