GST RCM and registration, Goods and Services Tax - GST

[CA Adarsh]

A Pvt Ltd hospital pays directors remuneration (can called as consultation fees) to doctors cum director.whether company needs to incorporate under GST (note:Hosiptal working under exempted service and as per GST laws provides exemption from registration from exempted services) and discharge rcm on remuneration to doctors cum director?

 

 

Posts / Replies

[Bishal Gope]

• As per Section 23(1)(a) of the CGST Act, 2017, a person exclusively engaged in supplying exempted services is not liable to register under GST.
• Healthcare services provided by hospitals, including services by doctors, are exempt under Notification No. 12/2017 – Central Tax (Rate), Entry No. 74.
  From your query it has been assumed that hospital is exclusively engaged in the exempted supply of services as a result No registration is taken.
•  RCM on Director’s Remuneration:
  > If the doctor-director is rendering services in the capacity of an employee, then it is outside the scope of GST (no RCM).
  > If the doctor-director is rendering consultation services separately (not under employment contract) and is paid as professional fees, then it becomes a supply of service by a director to the company.

Hence, in such a case, Hospital is liable to pay GST under RCM, only if It is a registered person under GST.

-Since the hospital is not registered (because it provides only exempted services), RCM is also not applicable.

[Sadanand Bulbule]

Healthcare services are exempt form GST.  However Room rent (excluding ICU,CCU,ICCU & NICU) exceeding Rs 5000/- per day per patient charged by a hospital shall be taxed to the extent of amount charged for the room at 5% without ITC under HSN 9993 as per the decision of 47th GST Council meeting. So hospitals charging the above mentioned room rent need to take registration and to pay tax including RCM  as applicable.

[Sadanand Bulbule]

Read it as: exempt from GST

[CA Adarsh]

Rent per room is less than Rs 5000/- not required GST Registration 

[Sadanand Bulbule]

Further, consultation fee paid to the doctor cum director by the hospital is exempt from GST. So there is no need to pay GST on such consultation fee under RCM by the hospital.

[YAGAY andSUN]

As per the provisions of the CGST Act, 2017, healthcare services provided by hospitals, including services by doctors, are exempt from GST under Notification No. 12/2017-Central Tax (Rate), Entry No. 74. Since the hospital is exclusively engaged in providing exempted services, it does not require GST registration under Section 23(1)(a) of the CGST Act, 2017.

Regarding the remuneration paid to doctor-directors:

1. If the doctor-director is rendering services in the capacity of an employee (i.e., under an employment contract), such remuneration would be outside the scope of GST and would not be subject to Reverse Charge Mechanism (RCM).
2. If the doctor-director is rendering services as a professional consultant (i.e., not under an employment contract), the payment for these consultation services would be considered a supply of service from the director to the hospital. However, in this scenario, RCM would apply only if the hospital is registered under GST.

Since the hospital is not registered under GST due to its exempt status, it is not required to discharge GST under RCM on the consultation fee paid to the doctor-director.

Key Points:

• Hospital's GST registration is not required as it provides exempt services.
• RCM on remuneration is not applicable as the hospital is not registered under GST.
• Consultation fees paid to doctor-directors are exempt from GST, so no GST needs to be paid on the remuneration.
• Room rent exceeding ₹5000 per day per patient is taxable at 5% without ITC. In such cases, the hospital would need to register and comply with GST provisions, including RCM.

In conclusion, the hospital does not need to pay GST on the consultation fees to the doctor-director under RCM, as it is not registered under GST and the service is exempt.

[Shilpi Jain]

If the director is an executive/employee director - no RCM liability.

Payment to Independent director there is a liability under RCM.

Pls chk these aspects as well.

[KASTURI SETHI]

In order to arrive at correct reply, it is absolutely necessary to know who is independent Director?. For this purpose peruse Section 149(6) of the Company Act, 2013 as amended and Board's Circular No.140/10/2020-GST dated 10.6.2020.    

In the light of above, more facts related to the issue are required so that there must be no room for 'BUT' and 'IF' in the reply.

[CA Adarsh]

Company is not required to have independent directors.

Thank you everyone for your reply on above query