Hospitals assessing to absorb GST on products and services rather than off-load to patients

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With Indian healthcare industry out of the ambit of GST, the sector is expected only to benefit as it would reduce impediments to spur business prospects. However there are certain levies coming in for consumables which the sector needs to closely assess on the impact. Broadly, the consensus is that the sector could absorb the cost rather than off load it to patients.

Healthcare providers conceded that GST is a remarkable step taken by the government and exempting healthcare from it will help the consumer to some extent.

CA Alka Saxena, financial controller, HealthCare atHOME stated that even if the sector will continue to exempt under GST regime, but the cost to the healthcare service provider would get impacted with an increase wherever tax rates fall under category of 18% or higher rate. The sector will be benefited with GST due to elimination of multiple taxation and simplified process of inter-state trading and tax set-offs particularly in pharmaceutical products. GST will bring a mixed effect to the healthcare industry.

According to Amol Naikawadi, JMD, Indus Health Plus, “Though, due to input tax levied on products & services, which will impact the costs for healthcare providers, the sector will try and absorb the cost themselves to a certain point; however, in the long run, the consumers will have to pay for the service cost.”

“However, in my opinion the healthcare services should be included in GST at nominal rate. This will ensure that all transactions in the healthcare sector will be mapped in the system, the government will get additional revenue and the healthcare organizations will get the benefit of input tax credit. There is a limited input on the overall cost of healthcare to the end consumer”, he added.

Healthcare sector has long been outside the indirect tax ambit for various social and political reasons and continues to be exempt under GST as well. While this may appear to be a patient-friendly move, the GST applicable on expenses incurred by hospitals continue to be a cost, which means patient bills may not come down under GST. In fact hospitals would have increased costs as taxes on services and prices of medicines are expected to increase broadly by 3%. Luxury tax on room charges has been subsumed into GST and could bring some relief to patients, said Sameer Agarwal, chief financial officer, Manipal Health Enterprises Pvt Ltd (MHEPL).

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