GST on Healthcare — Hospitals, Medicines, Medical Devices and Health Services

Healthcare is one of the most complex areas of GST — some services are fully exempt, others attract varying rates, and the correct classification can mean the difference between nil tax and 18%. For hospitals, clinics, pharmacies, medical device suppliers and health insurance companies in Kerala, understanding GST on healthcare is essential. Here is the complete guide.

Healthcare Services — GST Exemption

Health care services provided by a clinical establishment, an authorised medical practitioner or paramedics are exempt from GST (Nil rate). This includes:

• Services provided by government hospitals, private hospitals and nursing homes
• Consultation fees charged by doctors and specialists
• Dental services, physiotherapy and speech therapy
• Mental health services, rehabilitation services
• Emergency ambulance services
• Blood bank, bone bank, organ bank services
• Clinical laboratory tests and diagnostic services (when provided by a clinical establishment)

What is NOT Exempt in Healthcare?

• Room charges for non-ICU patients above ₹5,000 per day are taxable at 5% GST (GST Council clarification from 2022)
• Cosmetic surgery not aimed at treating illness or deformity — taxable at 18%
• Hair transplant, teeth whitening, liposuction (aesthetic procedures) — 18% GST
• Wellness and spa services — 18% GST
• Gym and fitness centre membership — 18% GST

GST on Medicines and Pharmaceuticals

• Life-saving drugs (insulin, vaccines, contraceptives, blood and blood products): 5% GST
• Medicines not in exempt list: 12% GST
• Ayurvedic, Siddha, Unani medicines (branded): 12% GST
• Surgical dressings, bandages: 12% GST

GST on Medical Devices

• Most medical devices (MRI machines, X-ray equipment, dialysis machines): 12% GST
• Orthopaedic implants, hearing aids: 5% GST
• Wheelchairs, prosthetics: 5% GST
• COVID-19 testing kits: 5% GST
• Contact lenses: 12% GST

GST on Health Insurance Premium

Health insurance premiums are taxable at 18% GST — one of the higher rates. This 18% GST on health insurance has been a point of controversy, as it makes insurance costlier. The GST Council has periodically discussed reduction but has not implemented one as of 2025. Individual taxpayers can claim the 18% GST paid as part of their health insurance premium for Section 80D deduction (the full premium including GST is deductible).

Conclusion

GST on healthcare requires careful navigation between exempt services and taxable supplies. SPOTON provides GST advisory and compliance services for hospitals, clinics, pharmacies and medical device distributors across Kerala. Contact us for expert healthcare GST guidance.