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CA Intermediate · Taxation · Exemptions from GST

Kaveri Hospital, a clinical establishment in Chennai, received during a month: (a) Rs 6,00,000 from in-patients for diagnostic, treatment and room charges, with room charges of Rs 4,000 per day for a patient admitted in a normal room; (b) Rs 1,50,000 from a pharmacy run inside the hospital for medicines supplied to in-patients as part of treatment; (c) Rs 90,000 for a cosmetic surgery done purely for appearance enhancement with no medical need. Which statement is correct?

Hospital treatment, diagnosis, room charges and medicines supplied to in-patients as part of treatment are exempt health care services. Cosmetic surgery done only for appearance, without any medical need such as restoring function or anatomy, is not health care and is therefore taxable.

  1. AAll three are taxable
  2. B(a) and (b) are exempt as health care services; (c) is taxable as cosmetic surgery without medical need is not health careCorrect
  3. COnly (a) is exempt; (b) and (c) are taxable
  4. DAll three are exempt as the supplier is a clinical establishment

Explanation

Health care services by a clinical establishment, including treatment, diagnosis and room charges in a normal room, are exempt. Medicines supplied to in-patients as part of treatment are a composite part of health care and exempt. Cosmetic or plastic surgery is exempt only when undertaken to restore anatomy or function after trauma, illness or congenital defect, so (c) is taxable.

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