The medical expenses have always been a crucial burden for many individuals, and while GST (Goods and Services Tax ) rates on healthcare services have undergone revisions, it has become imperative to understand its impact. The healthcare industry is constantly growing, and the GST rate affects healthcare services directly, making it crucial to research and understand the same. In this article, we will dive deep into understanding the impact of the health services GST rate on your medical bills.
What is the Health Services GST rate?
GST is an indirect tax levied on the supply of goods and services, which untangles all the cascading taxes levied on the goods. In India, healthcare services are classified under the category of exempted goods and services, which means zero GST. However, not all healthcare services enjoy the same tax benefits. GST is nonetheless applicable to all services availed by the healthcare sector except for diagnostic testing services like MRIs, X-rays, and blood tests.
The Impact on Medical Services
The GST rate on healthcare services has been primarily revised only twice since its introduction. In 2018, the GST council provided a 12% GST on all healthcare services, expecting to boost the healthcare industry’s revenue. The GST council also decided to exempt from GST all healthcare services that were covered under the health insurance scheme, which further gave a boost to the industry. However, this had a significant impact on the common man who was then forced to pay more for healthcare services.
The COVID-19 pandemic brought about several changes in the healthcare industry, demanding a GST rate increase to fund the provision of better healthcare facilities to all citizens. The GST council once again revised the GST rate, bringing it to 5% on all healthcare services, which directly aided in making healthcare services more affordable for the common man.
Effects of GST on Healthcare Providers
The GST rate has a significant impact on healthcare providers as it directly affects their revenue. Healthcare service providers are required to pay GST as input tax credit on all services availed by them, which impacts the overall cost of their services. The 12% rate levied before was considered high, and it directly impacted the healthcare providers’ profits, making healthcare services more expensive than it was intended to be.
The revisions made by the GST council helped healthcare providers lower their overall input cost, ultimately benefiting the common man. Hence, it is essential to note that the GST rate fluctuation doesn’t affect only the patient’s pocket but also has a severe impact on the healthcare provider’s business.
Conclusion
The impact of GST on healthcare services seems to have affected both the healthcare service providers and the common man. The fluctuation of GST rates demands us to be informed and keep up with the latest changes. The 5% GST rate levied on healthcare services after the GST council’s revision has helped the healthcare industry mitigate the impact of the pandemic and make healthcare services affordable for all citizens. It is essential to keep track of these changes and their impact to understand and make better-informed decisions regarding healthcare expenditure.
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