Standardise GST input slabs on healthcare at 5%, says industry body
The healthcare industry’s call comes against the backdrop of Prime Minister Narendra Modi’s announcement on upcoming GST reforms.
| Photo Credit:
DHARMAPADA BEHERA
Nathealth, an apex body representing the domestic healthcare industry, has called for GST input slabs on healthcare to be standardised at 5 per cent, and wherever GST output payments are applicable, providers be permitted to claim input credit.
Pointing out that healthcare has not fully benefited from Goods and Services Tax (GST), Nathealth said, “While GST rationalisation has delivered efficiency and cost advantages across many industries, healthcare has remained largely outside its ambit. What was intended as a compliance relief has, in practice, created significant challenges. Hospitals and diagnostic providers are unable to claim input tax credit on essential inputs ranging from medical equipment and consumables, to contractual labour, maintenance and critical services.”
The healthcare industry’s call comes against the backdrop of Prime Minister Narendra Modi’s announcement on upcoming GST reforms.
Hidden costs and care
Citing a study it conducted with EY across the country, Nathealth said, embedded taxes amount to an estimated 5.5–6 per cent of providers’ total revenues,“ a hidden cost that ultimately increases the cost of care for patients”.
According to the study, embedded taxes increased in the GST era – “for hospitals, they rose from 4.3 per cent in the pre-GST period (2016–17) to 5.7 per cent in the GST period (2018–19 to 2020–21), while for diagnostic laboratories and testing centres, the burden climbed from 3.8 per cent to 5.8 per cent.”
Ameera Shah, Nathealth President, and Promoter & Executive Chairperson, Metropolis Healthcare, said, “Every rupee saved through rationalisation can be redirected towards improving access, investing in new technologies, and supporting frontline staff… A pragmatic GST structure will ease the burden on providers while directly benefiting millions of Indians who rely on quality care.”
The industry body said that a standardised 5 per cent GST was critical, “as the current structure has significantly increased the cost burden on providers. Blocked credits today are higher than in the pre-GST regime, creating a hidden layer of costs. In addition, essential services such as contractual manpower attract 18 per cent GST, which disincentivises flexible hiring in a sector that is heavily people-dependent. A large share of embedded taxes is also linked to life-saving drugs and consumables, which temporary waivers have not adequately addressed.”
Published on August 20, 2025
