No GST on Hospital Services Under Membership Plans

Healthcare services provided under a membership scheme run by multi-super specialty hospitals to its members and their families are not taxable and will not face Goods and Services Tax, according to recent tax ruling by Gujarat Authority for Advance Ruling (AAR).

The ruling came in response to an application by Divyajivan Healthcare LPP. It had approached the AAR seeking clarity on levy of GST on a membership plan in its proposed multi-super specialty hospital. The applicant had also tied up with other hospitals in India where the members can avail healthcare services.

The applicant had sought the advance ruling on the issue whether the lump-sum amount received for healthcare services to be provided for 20 years by the applicant as ‘Diamond Plan’ was exempted from GST as per the relevant notification issued by the government. The AAR held that the scope of supply of services by the applicant was ‘healthcare services’ by a clinical establishment, which were exempted from GST.

The fact that the applicant had tied up with the other hospitals for diagnosis did not alter the scope of supply of healthcare services by the applicant to its services to its services recipients, it said.

The AAR is a quasi-judicial body that assesses potential tax liabilities for transactions beforehand.

Its ruling is case specific, but have persuasive impact on tax assessment in cases of other firms under similar circumstances.

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