VAT PAID ON DRUGS PURCHASED BUT NOT CLAIMED IN SALE

[Guest]

Dear ALL

I have a query.We buy medicines for a hospital and dealer charges vat for the supplied drugs.

Now we use them in the OT and charge the patients the whole procedure as a package which also includes drugs for which vat was paid.

Since we are using the drugs as part of a package , they are not billed separately and we are not able to recover the tax paid.How to recover tax in this case from the patient for which the drugs are used?

Is it legal to charge as a package ?

We are also not able to recover tax when we charge everything as a package

kindly advise

Regards

BALAJI

[YAGAY andSUN]

If you charge VAT on package then you can avail the Input Tax Credit.

[DR.MARIAPPAN GOVINDARAJAN]

In the package itself you may add the VAT.

[Ganeshan Kalyani]

You are treating the patient and not selling medicines. The supply of medicine to patient is incidental. The treatment providing activity is a service.

AI Summary

Input tax credit: include VAT in healthcare package pricing so VAT paid on medicines can be recovered. Composite package charges that include drugs should reflect VAT treatment so the supplier can claim input tax credit. If medicines are incidental to the principal medical service, the activity is a service with ancillary goods; hospitals must structure billing or explicitly include VAT in the package to be able to recover VAT paid on drugs.