EXEMPTION TO SALE OF MEDICINES BY A SEC.12A REGD. TRUST

[Padmanathan KV]

A CHARITABLE TRUST REGD U/S 12A OF THE IT ACT IS RUNNING A HOSPITAL. THE SERVICES ARE RENDERED AT NO PROFIT NO LOSS BASIS. A PHARMACY IS ALSO RUN BY THE TRUST INSIDE THE HOSPITAL AND SALES ARE TO PATIENTS TO WHOM PRESCRIPTION IS GIVEN BY THE HOSPITAL DOCTOR.OUTSIDERS DO NOT PATRONISE THE PHARMACY, THE OUTWARD SUPPLY OF MEDICINES BY THE PHARMACY EXCEEDS RS.20 LAKHS.

CAN THE TRUST CLAIM EXEMPTION FOR SUPPLY OF MEDICINES ALSO UNDER 'HEALTH CARE SERVICES'?

[ANITA BHADRA]

Sir

No .

Trust can not claim exemption for supply of medicine under health care services.

Notification No. 9/2017- Integrated Tax (Rate) dated 28.06.2017 has exempted health care services vide entry no 77 which includes any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment,

Sale of Medicines is Taxable:

[DR.MARIAPPAN GOVINDARAJAN]

It is taxable.

[Ganeshan Kalyani]

In my view it is exempt.

AI Summary

Health care services exemption does not cover sale of medicines, making hospital pharmacy sales taxable despite clinical context. Whether a charitable hospital can classify in-hospital pharmacy sales to its patients as exempt health care services is disputed. The notification exempts health care services like diagnosis and treatment by clinical establishments but does not expressly include retail sale of medicines. Commentators in the discussion predominantly conclude that sale of medicines by the hospital pharmacy is taxable and not covered by the health-care exemption, though a dissenting view believes such supplies may be exempt.