Medicine purchases by inpatients exempt from GST: TN AAR

Supply of medicines and consumables along with other services provided to an inpatient from admission until discharge to be treated as ‘composite supply’ and no GST to be applicable. However, medicines supplied to outpatient will attract GST, says Tamil Nadu Authority for Advance Rulings (TNAAR).

This ruling was given after GST Council recommended GST to be levied on non-ICU room rent above Rs. 5,000, but before the notification specifying date of July 18 was issued.

Applicant, the Chennai-based Be Well Hospitals Private Limited moved TNAAR seeking advance ruling on GST applicability for medicines and consumables supplied to inpatients and outpatients by the pharmacy unit of the hospital for diagnosis or treatment during the patient’s admission in hospital would be considered as ‘Composite Supply’ of healthcare service as under GST and consequently avail exemption.

Under GST, when goods/services supplied in a bundle, either it could be composite or mixed supplies. Composite Supply means supply of two or more goods or services or both. These are bundled and supplied in conjunction with each other in the ordinary course of business and one of which is called principal supply. Rate for principal supply will be rate for entire supply and if it is exempted, entire supply will be exempted.