Tax exemption for medicines & healthcare supplies to in-patients clarified under GST law.

The ruling under Section 98 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 confirmed that the supply of medicines to in-patients through the pharmacy and the medicines, drugs, stents, implants, etc., administered during treatment are not liable to tax. This decision was based on the composite nature of healthcare services, where such supplies are considered integral and exempt under the relevant notification.

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Issues:
1. Tax liability on medicines supplied to In-patients through pharmacy.
2. Tax liability on medicines, drugs, stents, implants, etc., administered to in-patients during medical treatment or procedure.

Analysis:

Issue 1: Tax liability on medicines supplied to In-patients through pharmacy
The application filed under Section 97 of the Central Goods & Services Tax Act, 2017 and Andhra Pradesh Goods & Services Tax Act, 2017 by a non-profit organization providing healthcare services raised questions regarding the taxability of medicines supplied to in-patients. The Authority for Advance Ruling examined the nature of services provided, considering the definition of healthcare services and the exemption under Notification No. 12/2017 - Central Tax (Rate). It was established that the supply of medicines to in-patients through the pharmacy is part of a composite supply of healthcare services, which is exempt from tax under Heading 9993 of the notification. The ruling clarified that such supplies are not liable to tax.

Issue 2: Tax liability on medicines, drugs, stents, implants, etc., administered to in-patients during medical treatment or procedure
The Authority further delved into the tax liability of medicines, drugs, stents, implants, etc., administered to in-patients during medical treatment or procedures. The ruling emphasized that these supplies are integral to the healthcare services provided to in-patients, forming part of a composite supply where healthcare is the principal service. As per Section 2(30) of the CGST Act, 2017, the tax liability for ancillary supplies, including medicines and consumables, is determined under Section 8. Given that healthcare services by a clinical establishment are nil rated under Heading 9993 of the notification, the medicines, drugs, stents, implants, and consumables administered to in-patients are also exempt from GST. This decision aligns with Circular No. 32/06/2018-GST, which clarifies the tax treatment of supplies in line with the composite nature of healthcare services.

In conclusion, the ruling issued under Section 98 of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017 confirmed that the supply of medicines to in-patients through the pharmacy and the medicines, drugs, stents, implants, etc., administered during treatment are not liable to tax, as they are part of the composite supply of healthcare services exempt under the relevant notification.

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