Imparting Practical Training To Nurses And Psychologists Not A 'Healthcare Services', No GST Exemption Available: AAR

The Karnataka Authority of Advance Ruling (AAR) has ruled that fees collected from nurses and psychologists for 'imparting practical training' are not exempted from GST.

The bench of M.P. Ravi Prasad and Kiran Reddy T. has observed that 'healthcare services' can be defined as a service by way of diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy. But the applicant is providing practical training to nursing students and psychologists, and hence the same is not covered under healthcare services.

The applicant is engaged in providing health care services by running a hospital. The applicant states that they are providing treatment to inpatients suffering from psychic disorders, substance use disorders, neurology, etc.

The applicant sought an advance ruling on the issue of whether the supply of medicines, drugs, and consumables used in the course of providing health care services to inpatients during the course of diagnosis and treatment during the patient's admission to the hospital would be considered "composite “supply” qualifying for exemption under the category of “health care services” as per the Services Exempt Notification.

Yet another issue raised was whether the supply of food to inpatients would be considered a “component supply” of health care services under the CGST Act, 2017 and the KGST Act, 2017 and, consequently, could be exempted under the Services Exempt Notification. Whether GST is applicable to money retained by the applicant. Whether GST is exempt from fees collected from nurses and psychologists for imparting practical training.

The applicant relied on Section 2 (30), which defines 'composite supply'. "Composite supply” means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both or any combination which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply." The room, medicines, consumables, and food supplied in the course of providing treatment to the patients admitted to the hospital are undoubtedly naturally bundled in the ordinary course of business, and the principal supply is health care services, which is the predominant element of the composite supply, while other supplies such as room, medicines, consumables, and food are incidental or ancillary to the predominant supply.

The AAR ruled that the supply of medicines, drugs, and consumables used in the course of providing health care services to inpatients during the course of diagnosis and treatment would be considered a “composite supply” of health care services qualifying for exemption as per entry No. 74(a) of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017.

The AAR stated that the supply of food to inpatients would be considered a “component supply” of health care services qualifying for exemption.

Advance Ruling No. KAR ADRG 06/2024

Click Here To Read Ruling