Healthcare is one of the most critical sectors of any economy — and in India, where accessibility and affordability are key challenges, taxing medical services could make them even harder to reach for common citizens.
To ensure that essential healthcare remains affordable, the government has exempted most medical and clinical services from GST under Notification No. 12/2017 – Central Tax (Rate) dated 28 June 2017.
This exemption applies broadly to hospitals, clinics, diagnostic centers, doctors, nurses, and paramedics, as well as certain healthcare-related services provided to patients.
1. Legal Framework
Under Section 11 of the CGST Act, 2017, read with Notification No. 12/2017 (Entries 46 & 74), the government exempts services by hospitals, doctors, and other health professionals when these services qualify as “health care services.”
2. What Are Health Care Services? (Definition)
As per the notification:
“Health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality, or pregnancy in any recognized system of medicine in India and includes:
- Transportation of the patient to and from a clinical establishment;
- Services provided by paramedics (nurses, midwives, technicians, lab assistants, etc.);
- Preventive health services and reproductive care.
It does not include cosmetic or plastic surgery unless undertaken to restore or reconstruct anatomy or function due to an injury or disease.
3. Entry 46 – Services by Clinical Establishments or Medical Practitioners
Under Entry 46, the following services are wholly exempt from GST:
- Services by clinical establishments (hospitals, nursing homes, diagnostic centers).
- Services by authorized medical practitioners.
- Services by paramedics.
This exemption ensures that the core medical treatment chain — from diagnosis to recovery — remains untaxed.
Example 1 Dr. Sinha’s Multispecialty Clinic):
A patient consults a doctor for diagnosis and treatment of a heart ailment and pays consultancy fees.
👉 Exempt from GST under Entry 46, as it is a direct health care service.
Example 2 – Nursing Services:
A private nurse is hired to provide post-surgery care to a patient at home.
👉 Exempt, since services by paramedics are covered under health care services.
4. Entry 74 – Services by Cord Blood Banks & Medical Testing
Entry 74 specifically exempts certain medical research and diagnostic services related to health and life sciences.
What’s Covered:
- Services by way of preservation of stem cells or any process related to storage or preservation of cord blood.
- Health-related diagnostic and testing services provided by medical laboratories.
This ensures that life-saving technologies and preventive medical research remain affordable.
Example 3 (LifeCell Labs):
A hospital collects and preserves stem cells from a newborn’s umbilical cord for future medical use.
👉 Exempt under Entry 74 — preservation of stem cells for medical treatment purposes.
Example 4 – Diagnostic Center:
A pathology lab conducts a blood test and issues a report to the patient. 👉 Exempt under Entry 46 — diagnostic services form part of health care treatment.
5. Systems of Medicine Recognized Under GST Exemption
The exemption applies only to treatments provided under recognized systems of medicine, including:
- Allopathy (modern medicine)
- Ayurveda
- Yoga and Naturopathy
- Unani
- Siddha
- Homeopathy
Services by recognized AYUSH practitioners or institutions are equally exempt.
6. Cosmetic and Plastic Surgery – When Exemption Applies
Not all cosmetic surgeries are exempt. The distinction depends on purpose.
| Type of Procedure | Exemption Status | Reason |
| Cosmetic surgery for beauty enhancement | ❌ Taxable | Not related to illness/injury |
| Plastic surgery after burn injury | ✅ Exempt | Restorative treatment |
| Rhinoplasty for nasal reconstruction | ✅ Exempt | Medical necessity |
| Liposuction for body shaping | ❌ Taxable | Aesthetic purpose only |
Example 5 (Dr. Neha’s Clinic):
A patient undergoes reconstructive surgery for a facial injury due to an accident.
👉 Exempt from GST, as it’s for restoration of physical function.
However, another patient opts for the same procedure purely for cosmetic improvement.
👉 Taxable, since it’s not medically required.
7. Hospital Room Rent Exemption Limit
The government introduced a specific condition for hospital room rent under the exemption notification.
As per latest clarification:
- Room rent up to ₹5,000 per day per patient (excluding ICU) is exempt.
- If rent exceeds ₹5,000/day, GST at 5% applies only on the amount exceeding ₹5,000, provided the hospital has ITC restrictions (no ITC claim allowed).
This ensures fairness — affordable rooms remain untaxed, while luxury hospital suites attract GST.
Example 6 (CityCare Hospital):
A hospital charges ₹4,800 per day for a general ward room.
👉 Fully exempt.
Another patient opts for a private room at ₹6,500 per day.
👉 GST applies on ₹1,500 (excess over ₹5,000), under 5% rate.
8. Ambulance & Patient Transportation Services
Services by way of transportation of a patient to or from a clinical establishment are fully exempt under Entry 46.
Example 7:
An ambulance service transfers a patient from home to a hospital after an accident.
👉 Exempt from GST, since it’s part of health care service.
However, ambulance rental for events or non-medical purposes would be taxable.
9. Services by Veterinary Clinics
The ICAI material also clarifies that health care services provided to animals are not exempt. This means veterinary services attract GST since they don’t fall under “health care services” as defined for humans.
Example 8:
A pet clinic treating a dog for an injury charges ₹2,000.
👉 Taxable, as veterinary care is not covered under the health care exemption.
10. Composite Supplies in Hospitals
Hospitals often provide multiple services — treatment, room rent, medicines, and diagnostics. These are treated as composite supplies, where the principal supply is health care service.
Hence, the entire package is exempt, provided it’s part of the treatment.
Example 9 (MetroMed Hospital):
Hospital issues a consolidated bill including:
- Room rent ₹4,000/day
- Doctor consultation ₹2,000
- Medicines ₹1,500
👉 Entire package is exempt, since all components form part of a single composite health care service.
However, if the hospital sells medicines to an outpatient (OPD) without treatment, GST applies on the medicine portion.
11. Non-Exempt Health-Related Services
Some activities related to healthcare are commercial in nature and hence taxable.
| Activity | GST Status | Reason |
| Cosmetic/aesthetic surgery | ❌ Taxable | Not for medical need |
| Veterinary services | ❌ Taxable | Not for humans |
| Sale of medicines outside treatment | ❌ Taxable | Supply of goods |
| Rent of medical equipment | ❌ Taxable | Commercial rental |
| Hospital cafeteria | ❌ Taxable | Not part of treatment |
| Health insurance services | ❌ Taxable | Financial service |
12. Charitable Hospitals and Trusts
If a charitable trust or NGO provides free or subsidized medical services, it continues to enjoy GST exemption under both:
- Entry 1 (for charitable activities), and
- Entry 46 (for health care services).
💡 Example 10 (Bhavyajyoti Foundation Hospital):
A charitable hospital offers free cataract surgeries to poor patients.
👉 Fully exempt under both entries, since it qualifies as health care and charitable activity.
If the same hospital runs a paid private ward, only that portion may attract GST if conditions exceed exemption limits (e.g., room rent > ₹5,000).
13. Circular Clarifications
The government has issued several circulars to remove ambiguity in healthcare exemptions.
Circular No. 32/06/2018-GST (dated 12 Feb 2018):
- Clarified that hospitals providing composite treatment packages (including diagnostics and medicines) are exempt in total.
Circular No. 221/15/2023-GST (dated 25 Sep 2023):
- Confirmed that GST on room rent applies only beyond ₹5,000/day.
- ICU charges remain fully exempt regardless of room rent.
14. Input Tax Credit (ITC) Implications
Hospitals and clinics providing only exempt services:
- Cannot collect GST from patients.
- Cannot claim ITC on purchases of equipment, drugs, or services.
If they provide both taxable and exempt services, ITC can be claimed proportionately under Rule 42 of the CGST Rules.
15. Key Takeaways
- Services by hospitals, doctors, and paramedics are exempt under Entry 46.
- Diagnostic, stem cell, and medical testing services are exempt under Entry 74.
- Cosmetic and aesthetic treatments are taxable unless restorative.
- Room rent exemption limit – up to ₹5,000/day (ICU always exempt).
- Ambulance services and paramedic care are fully exempt.
- Veterinary services are taxable (not included under human health care).
- Charitable hospitals continue to enjoy full exemption.
- Composite supplies in treatment are exempt; standalone sales may attract GST.
16. Conclusion
Healthcare exemptions under GST ensure that the taxation system supports social welfare instead of burdening it. By exempting essential medical, diagnostic, and clinical services, the government guarantees that citizens’ right to health care remains accessible and affordable.
From doctor consultations to hospital treatments and ambulance services, the exemptions under Entries 46 and 74 of Notification No. 12/2017 reflect India’s commitment to public health and humane taxation.
While luxury healthcare and cosmetic treatments rightly attract GST, the essential lifeline of medical services remains GST-free — just as it should be.
