Industry body says 5% GST on hospital room rent will increase expenses for patients

Industry body FICCI on Monday has written to union finance minister Nirmala Sitharaman seeking a zero-rating GST on healthcare services, which will enable service providers to avail input tax credit wherever necessary.

The letter to the finance minister follows the GST Council imposing a levy of 12 percent on biomedical waste and a 5 percent GST on hospital room rent above Rs 5,000 per day (excluding ICU).

According to FICCI, 5 percent GST on room rent will increase the cost of healthcare for the middle class. It also said the recommendations will increase the cost of compliance and will create confusion.

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Further, the body has requested the government to discontinue the exemption of healthcare from GST so that input tax credit can be availed.

In an interview with CNBC-TV18, Gautam Khanna, Chair of the FICCI Health Committee and CEO at PD Hinduja Hospital said the 5 percent GST without input tax credit will increase the expenses for the patients.

"The 5 percent GST without input tax credit will mean that additional cost will have to be passed on to the patient. The patients are ill, they have all kinds of expenses and this will unnecessarily increase the expenses for the patient," Khanna said.

Also, he said many times the rooms are part of certain packages and it is difficult to do compliance because you will have to keep the room rate separate from the package and then compliance will be an issue.

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Dr. Alok Roy, chairman at Medica Group of Hospitals said room rents can change based on packages and so it will be difficult to convince GST authorities that the room rate was lower than Rs 5,000.

"The government encourages us to go for packages because that way, the patient knows his outgo is fixed. The biggest disadvantage of GST on Rs 5,000 room rent is that based on different corporates the room rate changes.

So the same room will be available for Rs 3,000 or sometimes Rs 2,000. So there is no way that we can convince the GST people that the room rent which is Rs 5,000 can go down in certain packages," Roy added.