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CA Final · Indirect Tax Laws · Exemptions from GST

Sanjivani Charitable Trust runs a clinical establishment in Pune that provides health care services by way of diagnosis and treatment to patients. It also lets out a room in the same building to a pharmacy chain on monthly rent. Which of the following statements is correct under GST?

Health care services by a clinical establishment are exempt, but renting a room to a pharmacy chain is a separate taxable supply. The exemption depends on the nature of the service, not on the trust being charitable, so the rent is taxable subject to the registration threshold.

  1. ABoth the health care services and the rent for the pharmacy room are exempt, because the trust is a charitable entity
  2. BHealth care services by a clinical establishment are exempt, but the rent received from the pharmacy chain is a taxable supply, subject to the registration thresholdCorrect
  3. CHealth care services are taxable, since the establishment is run by a trust, while the rent is exempt
  4. DBoth are taxable, because exemption is available only to government hospitals

Explanation

Health care services by a clinical establishment are exempt under the services exemption notification. That exemption is tied to the nature of the service, not to the status of the provider as a charity. Letting out a room to a commercial pharmacy is a separate supply of renting of immovable property, which is taxable subject to the threshold. The option treating both as exempt wrongly extends the exemption based on charitable status.

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