Restrict GST ITC on Medicines Used for Patients in the Supply of Health Services

The Karnataka Authority of Advance Ruling (AAR) directed that the Input Tax Credit should not be there on medicines adopted in importing

health care services

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rendered to sufferers.

The petitioner is the owner of Ambara which is partnered with someone and is enrolled in the procurement of Goods and Service Act 2017. The petitioner mentions that they provide the health care services and runs the hospital named CURA hospital. The petitioner offers wellness services that have the services for the diagnostic and treatment services.

Petitioner Seeks Advanced Law on Numerous Concerns:

• Firstly is there a need to restrict the input tax credit on the medicines supply to the patients

  

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• Secondly, if the input tax credit is needed to be limited to the health care services given to the patients it resembles as an outpatient

• Thirdly, whether the input tax credit is needed to be restricted on the medicines given to another person then inpatients and outpatients

• Fourthly, the input tax credit is needed to be banned on supplying the foods and beverages inside the hospital

Two membered benches Dr M.P. Ravi Prasad and Mashood ur Rehman Faruqooi directed that the input tax credit is needed to be banned on the medicines handles for the supplying of health care services given to the patients.

AAR states that

Input Tax Credit (ITC)

A complete guide for understanding the basics of input tax credit and it calculation with detailed examples under GST (Goods and Services Tax) India

is needed to be banned on the medicines used to supply for the health care services given to the outpatients. Moreover, in case the medicines are given unconventional to the health care services post that the petitioner is liable to avail the income tax credit with respect to the payment of taxes on the unconventional medicine supply.

“The input tax credit is not required to be restricted on medicines supplied to others i.e. customers, who are neither inpatients nor outpatients, as there is no health care services provided and is liable to pay tax on such outward supply of medicines,”

The council specifies that the input tax credit needs to be banned on the supply of food and beverages given to the inpatient which is a division of the health care services.

Read Order by Karnataka AAR