Understanding GST Rates and SAC Code 9993 for Healthcare Services

Introduced in 2017, the Goods and Services Tax system in India sought to blend the diverse indirect taxes into one, making it easier for citizens to pay taxes. This was, however, controversial within the healthcare sector as it had the potential to interfere with several public benefits. The categorization of healthcare services under GST makes use of SAC Code 9993, which is often referred to as 'medical HSN code' or 'SAC code.' In this article, we analyze how GST can negatively impact healthcare provider and patient relationships as well as the number of insurers taking part, especially in relation to SAC 9993, exemptions, and compliance.

SAC Code 9993: The Cornerstone of Healthcare Services

SAC codes are to the GST as HSN codes are to goods. Code 9993 encapsulates the broad field of ‘human health and social care services’ which covers:

1. Medical consultations including specialists and surgeons.

2. Imaging and Diagnostic

3. Surgery and inpatient nursing.

4. Patient transport services via ambulance.

5. Palliative and Rehabilitation care.

There is a misconception around SAC 9993 pertaining to its relation with HSN codes for medical equipment and other items such as medicines. SAC 9993 is used strictly for medical services and therefore removes any confusion in the tax compliance process.

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GST Rates for Healthcare Services: Different Types of Exemptions and Issues Of Taxation

Healthcare services classified under SAC 9993 largely qualify for GST exemptions to guarantee affordability. However, certain situations do attract taxes, depending on the service provider as well as the service itself.

Health-related Services Without GST

In as much as there are expenses for some services, the following are fully exempt under the law:

1. Services rendered by clinical facilities: Exempt are hospitals, clinics and nursing homes providing inpatient/outpatient as well as outpatient services.

2. Medical practitioners: Doctors, dentists, and other specialists providing consultative services in outpatients ( not multi-tasking or on-call consultative services).

3. Preventive health check-ups: Outpatient services that include corporate health programs.

4. Services: Government as well as non-profit entities such as ambulance services, diagnostics and treatment.

GST On Health Care Services

Some services that fall under SAC 9993 may attract NTB if certain conditions are met:

1. Stand-alone diagnostic laboratories: Pathology tests or radiology services unconnected to hospitalization are subject to 5% GST without any Input Tax Credit (ITC).

2. Private ambulance services: Operations rendered by non-government personnel attract 5% GST.

3. Health insurance: While SAC 9993 deals with medical services, insurance is covered under SAC 9964 for life insurance and 9972 for general, with a payment of 18% tax.

Table 1: GST Rates for Key Healthcare Services

SAC/HSN Code	Service Description	GST Rate	Remarks
9993	Hospitalization & Consultations	Exempt	Applies to clinical establishments
9993	Diagnostic Tests (Standalone)	5%	Exempt if part of hospitalization
9993	Private Ambulance Services	5%	Exempt for govt./NGO providers
9964/9972	Health Insurance Premiums	18%	Includes coverage for treatments
9993	Cosmetic Surgery	18%	Non-essential procedures
9993	Human Health And Social Care Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999311	Inpatient Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999312	Medical And Dental Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999313	Childbirth And Related Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999314	Nursing And Physiotherapeutic Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999315	Ambulance Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999316	Medical Laboratory And Diagnostic-Imaging Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999317	Blood, Sperm And Organ Bank Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999319	Other Human Health Services Including Homeopathy, Unani, Ayurveda, Naturopathy, Acupuncture Etc.	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999321	Residential Health-Care Services Other Than By Hospitals	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999322	Residential Care Services For The Elderly And Persons With Disabilities	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999331	Residential Care Services For Children Suffering From Mental Retardation, Mental Health Illnesses Or Substance Abuse	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999332	Other Social Services With Accommodation For Children	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999333	Residential Care Services For Adults Suffering From Mental Retardation, Mental Health Illnesses Or Substance Abuse	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999334	Other Social Services With Accommodation For Adults	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999341	Vocational Rehabilitation Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999349	Other Social Services Without Accommodation For The Elderly And Disabled N.E.C.	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999351	Child Day-Care Services	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999352	Guidance And Counseling Services N.E.C. Related To Children	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999353	Welfare Services Without Accommodation	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.
999359	Other Social Services Without Accommodation N.E.C.	18	Nil Provided that Director (Sports), Ministry of Youth Affairs and Sports certifies that the services are directly or indirectly related to any of the events under FIFA U-17 Women's World Cup 2020.

Impact of GST on Healthcare Providers and Patients

For example, in GST, a patient needing a surgery at a hospital does not pay GST on bed charges, or on the surgeon's fees, or on the diagnostics. GST does not apply to core medical services, which reduces patients’ out-of-pocket spending, supporting the government’s public health agenda. However, there is a 5% GST on standalone MRI scans at private laboratories, which may dissuade low-income patients. Healthcare providers deal with multiparty issues:

1. Input Tax Credit (ITC) Limitations: As a result of exempt services, ITC can be claimed on equipment like ambulances, but not on other inputs, which increase the operational cost.

2. Compliance Burden: Exempt and taxable services require intricate bookkeeping lest penalties result.

Compliance Essentials for Healthcare Entities

1. Apply the Correct SAC Code: Maintenance of SAC 9993 for health services, and SAC 9964/9972 for insurance is essential to avoid scrutiny.

2. Record Keeping: Use different books of accounts for exempt and non-exempt services. For instance, a hospital that operates a diagnostic laboratory must differentiate between GST charged, and non-gst charged revenue.

3. Invoicing: For example, private practitioners (cosmetic surgeons) must display how much GST will be charged. Also, invoicing should include SAC 9993.

4. Returning of Filings: GSTR-1 and GSTR-3B are filed monthly. Taxable and exempt turnovers reported separately.

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The Road Ahead: Balancing Affordability and Compliance

Though there is some precedent concerning GST exemptions on fundamental healthcare services, these regulations still create a significant degree of uncertainty. Take for example the telemedicine consultations, which are available but not carved in stone, leading to lack of clarity on the provider’s side. Alone, the 5% GST standard placed on standalone diagnostics cases stimulates arguments over affordability.

“Healthcare for All” is a goal that the government strives to achieve, which justifies why revisions of GST are such a priority. Activity like broadening the scope of exemptions to include preventive care and mental health services would help to address inclusivity. On the other side, health care providers need to have that information at hand, ideally from the CBIC site and the tax advisor procurers.

FAQs

1. What is SAC Code 9993 (medical HSN code)?

SAC Code 9993 refers to people’s health and social care services for human beings categorized under GST. It includes services such as consultancy, diagnostics, hospitalization, and even ambulance service. There is no, unlike the other goods, HSN codes for SAC 9993 as it is solely about the health care service.

2. Is GST taxable for diagnostic services covered by SAC 9993?

Yes, there are certain standalone GST on diagnostic services like blood tests and MRIs that result in a 5% GST charge, unless covered as inpatient/outpatient hospital services, which remain exempt.

3. Are ambulance services covered under SAC 9993 taxable?

Private ambulance services are charged a 5% GST on ambulance services that are managed by the government or NGOs that don't incur any GST.

4. Do doctors charge GST on consultations under SAC 9993?

Registered medical practitioners like doctors and surgeons can provide consultations without a GST fee unless it was conducted through a third-party platform that is taxable, so no, they do not charge GST on these consultations.

5. What are some exempt health care services under GSTt?

Charitable hospitals, government hospitals, and Clinical establishments provide services that are exempted for taxes whereas nursing care, hospitalization, and consultations are treated normally.