Impact of GST on HealthCare and Pharma Sector

In this post, we cover the GST rate for medications, the effect of GST on drugs in India, the GST for medical services, the GST for medical equipment, the GST for hospitalization costs, and more. The GST duty on pharmaceutical products may be Nil, 5%, 12%, or 18%, among other tax rates. Vaccines and medications that can save lives often have the lowest rates, but goods like nicotine gum have an 18% rate.

NIL GST Rate

1. The components of human blood and its byproducts utilized in medicine

2. Various forms of birth control

3. Tampons or sanitary napkins

5% GST Rate

The following are a few examples of the medical items that are subject to a 5% GST.

1. Vaccinations made with animal or human blood

2. Salts for oral rehydration of insulin

3. Diagnostic tools for detecting all hepatitis kinds

4. Injection of desferrioxamine or deferiprone

5. Cyclosporin medications without a brand name that are utilized in biochemical systems

6. Synthetic kidneys

7. Disposable sterilized dialyzers or artificial kidney micro barrier

8. Prosthetic limbs

12% GST Rate

1. Using animal blood for diagnostic, preventative, or therapeutic purposes

2. Antibodies, more blood components, and altered immunological products

3. Products that are toxic, bacterial cultures, and comparable in nature

4. Medications made up of two or more ingredients that have been combined for medicinal or preventative purposes; they are not sold in measured doses, forms, or packaging. This comprises medicines from ayurveda, homeopathy, unani, siddha, or biochemical systems.

5. Medications made up of combined or uncombined ingredients for therapeutic or preventive purposes, in predetermined doses, forms, or packaging for retail sale. This comprises medicines from ayurveda, homeopathy, unani, siddha, or biochemical systems.

6. Wadding, bandages, gauze, and similar items coated with pharmaceuticals are sold at retail for use in surgery, medicine, dentistry, or veterinary medicine.

18% GST

‘The following are a few examples of the medical items that are subject to an 18% GST charge.

1. Products containing nicotine for oral, transdermal, or other applications that are meant to help people quit smoking

2. Sanitary or medicinal items like teats, hot water bottles, ice bags, etc.

3. dental floss and oral hygiene products that are marketed in separate retail packaging

4. Furniture for use in surgery, medicine, dentistry, or veterinary care, such as operating tables, hospital beds, exam tables, etc., with mechanical fittings; chairs for dentists, barbers, etc.

5. Razors and blades for razors

GST on Medical Services

A hospital or clinical establishment must charge GST at 5% on all non-intensive care unit (ICU), critical care unit (CCU), intensive cardiac care unit (ICCU), and neonatal intensive care unit (NICU) room rentals that exceed Rs. 5,000 per day (without input tax credit). It is applicable beginning on July 18, 2022.

Any medical services provided in one of the following methods will have no GST applied to them:

1. Using the rooms in the intensive care unit (ICU), critical care unit (CCU), intensive cardiac care unit (ICCU), or neonatal intensive care unit (NICU).

2. Health care services provided to a person receiving such services by a clinical facility, an authorized medical professional, or paramedics, except the rental of rooms other than those mentioned above when the room prices do not exceed Rs. 5,000 per day.

3. transporting a patient in an ambulance for purposes other than those mentioned above.

GST on expired medicines or the return of drugs

If a medication expires without being used, it is returned to the manufacturer through the supply chain. Here, the distributor or retailer may select either of the two possibilities listed below:

1. Treating the returned goods as a new supply - In this scenario, the wholesaler will destroy the expired products and record the returns of those products as purchases. Since there would be no ITC available on these goods since they are eventually destroyed, any ITC obtained on them will be reversed by the producer.

2. Issuing a credit note for the returned items - The provider can only modify the tax liability if the person returning the expired drugs has not claimed ITC. The ITC must be reversed if it has already been used.