Hospitals under Service Tax

[Raja krishnan]

Previously as per Notification No: 24/2010-ST dated 22.06.2010 as per Section 65(105)(zzzzo) of the Finance Act 1994 introduced Health Services are taxable services and are applicable to payment Service Tax. Now the period medical expenses are day to day becoming more costly so Central Government that it gave Mega exemption to Medical and para medical services vide Mega Exemption Notification No:25/2012-ST dated 20.06.2012.

Notification No:25/2012 dated 20.06.2012

Health care Services by a clinical establishment an authorized medical practitioner or Para-medics are exempt in quoted Sl.No 2 in the above Notification effect from 01.07.2012.  For your retain information see briefly:-

“Clinical establishment “means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.

“ Health care services “ means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India and includes services by way transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or function of body affected due to congenital defects, developmental abnormalities, injury or trauma.

 “Authorised medical practitioner “means a medical registered practitioner with any of the councils of the recognized system of medicines established or recognized by law in India and includes a medical professional having the requisite qualification to practice in any recognized system of medicines in India as per any law for the time being in force.  

So there is clear exemption to services of MBBS, surgeons, nursing homes, physiotherapist or other medical professionals.

Paramedic are trained health care professionals for example nursing staff, physiotherapists, technicians, lab assistants etc., Services by them in a clinical establishment would be in the capacity of employee and not provided in independent capacity and will thus be considered as services by such clinical establishment and similar services in independent capacity are also exempted  - refer Para 7.2.2 of CBEC’s Educational Guide on 20.06.2012.

Veterinary Services “Services by a veterinary clinic in relation to health care of animals or birds are exempted vide serial no. 3 of the Notification No. 25/2012 dated 20.06.2012 effective from 01.07.2012.

One more important service of Ambulance service also exempted - see definition clause 2(t) of the above Notification No. 25/2012 dated 20.06.2012-

“….includes services by way transportation of the patient to and from a clinical establishment”.

Technical testing of new drugs  Service by the way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical trials by the Drug Controller General of India are exempt – serial no. 7 of the above Notification No. 25/2012 dated 20.06.2012.

But this particular above Notification is not cleared & mentioned the following systems of medicine, because in terms of the Clause (h) of section 2 of the Clinical Establishments Act, 2010, the following systems of medicine are recognized systems of medicine:

• Allopathy • Yoga  • Naturopathy • Ayurveda • Homeopathy • Siddha • Unani

Any way the Notification No.25/2012 dated 20.06.2012 clarified that Healthcare Service, Hospitals, Medical Practitioner,ambulance Services are fully exempted from the Service Tax.