Effect of GST on Healthcare
Cost unchanged:
Under the ambit of GST, healthcare services refer to any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised systems of medicine in India, and include services by way of transportation of the patient to and from a clinical establishment.
Cost reduction:
Medical Tourism is on the way of expanded profitability and promising development due to cost reduction.
GST may also be a boon for increased foreign investments due to tax stability.
GST will facilitate significant cost reduction for importing advanced medical equipment.
Cost Increased:
GST rebate does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects.
An upsurge in taxes of raw materials or machinery can impact the overall costs increase in the healthcare ecosystem.
Most of the drugs mentioned under the 5% bracket are used to cure malaria, HIV-AIDS, tuberculosis and diabetes which were previously charged VAT around 4%.
Other categorised drugs will be charged @ 12%
Nicotine polacrilex gum is the only pharmaceutical product to be charged at the rate of 18%. Cipla,
Ayurveda drugs were charged an average VAT of 4% and excise of 1.5% due to the excise free manufacturing zone benefit. Under GST, they could get costlier as they would be taxed at the rate of 12%.
The healthcare sector may experience a blow from the GST implementation as outsourced services, along with the aesthetics and outpatient pharmacy are subject to GST tax imposition.
Conclusion:
The impact of GST on the Healthcare segment is still indeterminate.
There needs to be more clarity on how the proposed GST will impact tax-free zones, physician samples, bonus schemes, free sampling and inter-movement of stock transfers.
Dr. Ashish Tiwari,
Director, ACS Health, Mumbai.
