The short answer
Health care services by a clinical establishment or a registered practitioner are exempt. GST appears in a handful of specific places: certain hospital rooms, the over-the-counter pharmacy, cosmetic procedures, food for people who are not patients, and what you charge others to use your premises. Everything else in this article is detail on those five.
What is exempt
The exemption covers health care services provided by a clinical establishment, an authorised medical practitioner or para-medics, and transporting a patient in an ambulance. In this context:
- Health care services means diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicine, including taking the patient to and from the establishment.
- A clinical establishment is a hospital, nursing home, clinic, sanatorium or similar institution, and includes standalone or embedded diagnostic units.
- An authorised medical practitioner is one registered with a council of a recognised system of medicine — which includes AYUSH systems.
The exemption applies to the hospital's bill as a whole, including the doctors' fees within it. Medicines, consumables and implants used while treating an admitted patient are part of that exempt service, and so is the food served to in-patients.
Where GST does apply
1. Hospital rooms over ₹5,000 a day
A room other than ICU, CCU, ICCU or NICU charged at more than ₹5,000 a day is taxed at 5%, without input tax credit. The tax applies to the whole room charge, not just the part above ₹5,000. This rule dates from July 2022 and was left unchanged by the September 2025 rate changes.
2. The over-the-counter pharmacy
Medicines sold to out-patients and walk-in customers are a taxable sale of goods, separate from any health care service. From 22 September 2025:
| Item | Before | From 22 Sep 2025 |
|---|---|---|
| 36 specified life-saving drugs | 12% or 5% | Nil |
| Other medicines | 12% | 5% |
| Diagnostic kits and reagents, glucometers and strips, gauze and bandages, medical oxygen, surgical gloves, corrective spectacles, many medical instruments | 12% | 5% |
| Thermometers and analysis apparatus | 18% | 5% |
3. Cosmetic procedures
Cosmetic and plastic surgery is outside the exemption unless it restores anatomy or function lost to a congenital defect, a developmental abnormality, an injury or trauma. Hair transplants are also outside it. The rate is currently unsettled: most guides still apply 18%, but the classification used for cosmetic treatment sits in a group whose rate was cut to 5% without input credit in September 2025, and there is no official clarification yet. Take your CA's view before you bill.
4. Food for people who are not patients
Meals for admitted patients are part of the exempt service. Food sold to attendants, visitors and out-patients is a restaurant service, taxed at 5% without input credit.
5. What you charge others
Renting space to a pharmacy, a laboratory chain or visiting doctors is taxable at 18%, as are most training programmes, conferences, sponsorships and paid parking.
Input tax credit: why the rate cuts matter to an exempt hospital
Because health care services are exempt, the GST a hospital pays on what it buys for those services cannot be claimed back — it is simply a cost. That is why the September 2025 cut on medicines and devices from 12% to 5% lowered hospitals' costs directly. Credit is available only on the taxable side of the business, such as the out-patient pharmacy, and inputs used for both sides have to be apportioned. Room rent above ₹5,000 is treated like an exempt supply for this purpose, because it carries no credit.
One trap: a registered hospital renting premises from an unregistered landlord pays 18% on that rent itself under reverse charge — and if the premises serve exempt services, most of that credit is blocked.
Do you need to register?
- Only exempt services: no registration is required.
- Any taxable supply at all: the ₹20 lakh threshold (₹10 lakh in Manipur, Mizoram, Nagaland and Tripura) applies to your aggregate turnover, which includes your exempt fees. A clinic with ₹2 crore of exempt consultations and ₹1 lakh of pharmacy sales must register.
- Shipping taxable goods to another state requires registration regardless of turnover.
- A simplified registration route has been available since November 2025 for businesses with small amounts of output tax on business-to-business supplies.
CGST and SGST, or IGST?
This is the question receptionists get wrong most often, usually in the direction of charging IGST when it does not apply.
- A patient from another state buys medicines at your counter: CGST + SGST. For goods, the place of supply is where they are handed over, so the patient's home state is irrelevant.
- You ship medicines to an address in another state: IGST.
- Services performed at your premises — treatment, procedures, food: the place of supply is where the service is actually performed, so it is intra-state whoever the patient is. (Exempt services carry no GST at all, of course.)
- Rent for space in your building: the location of the property, so intra-state.
- Training for a registered business in another state, or other business-to-business services: IGST.
In practice IGST appears for a typical clinic when goods are shipped out of state, when it supplies services to registered businesses elsewhere, for supplies to SEZ units, and for transfers between a chain's own registrations in different states.
E-invoicing
The e-invoicing threshold is ₹5 crore of aggregate turnover in any year since 2017–18, and exempt revenue counts towards it — so many mid-size hospitals are in scope. In practice it bites on the business-to-business taxable supplies, such as rent charged to a registered pharmacy operator, rather than on patient bills. Businesses with turnover of ₹10 crore or more must report an e-invoice within 30 days of its date.
Still unsettled — ask your CA
- The rate on cosmetic and plastic surgery: 5% without credit, or 18%.
- Whether in-patient food supplied by an outsourced caterer stays exempt in the caterer's hands.
- Medicines and consumables used in day-care and OPD procedures, where advance rulings differ.
- Exactly who counts as a para-medic for the exemption.
Advance rulings bind only the parties to them, so treat any single ruling as a signal, not a rule.
Where billing software helps
The mistakes above are almost all classification mistakes made at the counter. Medixar keeps HSN and SAC codes on items and services, splits tax into CGST and SGST or IGST by place of supply when the bill is raised rather than leaving it to the receptionist, and prepares the data for GSTR-1 and GSTR-3B.
See GST billing on your own items
We'll set up your services and pharmacy items on a tenant of your own and walk through the bills.
Book a demoSources
- Notification 12/2017-Central Tax (Rate), entry 74, as amended by Notification 03/2022-CT(R) (July 2022).
- Notifications 15/2025 and 16/2025-Central Tax (Rate), 17 September 2025; GST Council press release, September 2025.
- CBIC Circular 32/06/2018-GST (12 February 2018).
- IGST Act, sections 10 and 12 — CBIC text of section 12.
This article explains GST rules as published up to 13 October 2026. It is not tax or legal advice; rates and rules change, so confirm your position with a chartered accountant before acting on it.