Press Information Bureau

Government of India

Ministry of Finance

26-March-2012 18:53 IST

Public sector general insurance companies not to charge service tax on cashless hospitalization claims

Public Sector General Insurance Companies do not charge Service Tax on Cashless Hospitalization claims. However, hospitals were charging Service Tax on Cashless Hospitalization from 01.07.2010 to 30.04.2011 as per the provisions of the Finance Act, 2010. The amount so charged by the hospitals was also paid by the Insurance Companies, if the claims were admitted subject to the limit of Sum Insured. However, the Service tax on cashless payments was withdrawn vide Government of India Notification No.30/2011 effective from 01.05.2011.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Lok Sabha.

DSM/SS/Hb

Service tax on cashless hospitalization withdrawn, insurers do not charge and prior hospital charges were reimbursed subject to sum insured. Public sector general insurance companies do not levy service tax on cashless hospitalization claims. Hospitals had charged service tax on such cashless hospitalization under the Finance Act, 2010, and insurers reimbursed those amounts for admitted claims subject to the sum insured limit. The service tax on cashless payments was withdrawn by Government Notification No.30/2011, effective from 1 May 2011, eliminating the tax on cashless hospitalization transactions.