GST on Hospital In-patient Services and Room Rent Charges
Healthcare services for in-patients are a composite supply, but room rent over Rs. 5,000 per day is taxable under GST.
- Ruling
- GST-ARA-68/2020-21/B-628 dated 28/11/2025
- Dated
- 28 Nov 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- In-patient services are considered a single composite supply.
- Healthcare services are generally exempt from GST.
- Room rent exceeding Rs. 5,000 per day is taxable.
- ICU, CCU, and NICU charges are excluded from the rent limit.
In short
The company asked if their bundled hospital services for in-patients, including tests and medicines, qualify for a full GST exemption. The Authority for Advance Ruling (AAR) examined whether these services are a single 'composite supply' where healthcare is the main service. They confirmed the bundle is a composite supply, but clarified that the tax exemption has a specific limit regarding room rent.
What has changed
How it worked before
Many hospitals assumed that all services provided to an in-patient under a single invoice were fully exempt from GST as part of a healthcare package.
What has changed
The authority ruled that while the bundle is a composite supply, the exemption is not absolute. If a patient's room rent exceeds Rs. 5,000 per day, that specific portion of the bill becomes taxable, even if the rest of the medical services remain exempt.
Who this affects
Nursing homes, hospitals, and clinics providing in-patient medical treatment.
An example
A private hospital charges a patient Rs. 6,000 per day for a private room, plus costs for nursing and tests. The hospital asks if the entire bill is exempt. Based on this ruling, the Rs. 6,000 room charge is taxable because it exceeds the Rs. 5,000 limit, while the other medical services remain exempt.
What you should do
Review your billing structure to see if your room rent charges exceed the Rs. 5,000 threshold. Remember that this ruling only binds the specific business that asked; it is not a universal law for all hospitals, though it shows how the tax department currently interprets these rules.
If you do nothing
If you assume your services are fully exempt and stop collecting tax on high-value room rents, you may face a tax demand later. The tax department could charge you the unpaid GST plus interest and penalties for incorrect filing. Relying on a ruling that does not apply to your specific case leaves you vulnerable during an audit.
The terms explained
- Composite supply
- A set of goods or services provided together that are naturally bundled and sold as a single package, where one service is the main component.
- Exemption
- A situation where the government decides that a specific service or product is not subject to GST.
- In-patient
- A patient who is admitted to a hospital or nursing home for medical treatment and stays overnight or longer.
The ruling in detail
Authority for Advance Ruling
M/s. Laxmi Health Care Centre & ICCU
GST-ARA-68/2020-21/B-628 dated 28/11/2025 · Maharashtra
Questions before the authority
- Whether charges recovered towards pathological test, radiological test and other medical test, bed charges and charges for medicines & other consumables during course rendering medical treatment to in-patients is single supply of healthcare service?
- Whether applicant is eligible for exemption under entry 74 of notification 12/2017-CT (Rate) dated 28th June, 2017 for above charges recovered from in patients under 1 common contract/invoice?
Facts
The applicant is a nursing home that provides healthcare services to in-patients under the supervision of doctors. They issue a single invoice to in-patients that includes charges for room rent, nursing care, laboratory tests, medicines, and other consumables. The applicant maintains an in-house pharmacy for the supply of medicines to both in-patients and out-patients.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of services to in-patients | Composite supply with healthcare services as the principal supply Taxable at the rate provided for healthcare services |
| Eligibility for exemption under entry 74 | Exempt, subject to conditions Room rent charges exceeding Rs. 5000 per day (excluding ICU/CCU/NICU) are taxable |
The authority held that the services provided to in-patients constitute a composite supply with healthcare services as the principal supply. While this composite supply is generally exempt, the benefit is subject to a specific proviso regarding room rent charges. Specifically, room rent charges exceeding Rs. 5000 per day (excluding ICU/CCU/NICU) are not exempt from tax.
Reasoning
The authority relied on the definition of composite supply under Section 2(30) of the CGST Act, 2017, determining that the various services and goods provided to in-patients are naturally bundled. It concluded that healthcare services are the principal supply, which is exempt under Entry 74 of Notification No. 12/2017-CT (Rate). However, it noted that this exemption is not absolute and is qualified by a proviso introduced by Notification No. 4/2022-CT (Rate), which excludes room rent charges exceeding Rs. 5000 per day from the exemption. Therefore, while the overall service is a composite supply of healthcare, the specific component of room rent is taxable if it exceeds the prescribed threshold.
Provisions relied on
- Section 2(30) of the CGST Act, 2017
- Section 8(a) of the CGST Act, 2017
- Entry 74 of Notification No. 12/2017-CT (Rate) dated 28.06.2017
- Notification No. 4/2022-CT (Rate) dated 13.07.2022
- Circular No. 32/06/2018-GST dated 12.02.2018
For the practitioner
This ruling confirms that hospital services provided to in-patients are a **composite supply** of healthcare services. It is highly useful for practitioners as it clarifies that the exemption under Entry 74 is **not a blanket exemption** and is subject to the room rent threshold introduced in 2022. It does not provide relief for room rent charges exceeding Rs. 5000 per day, which remain taxable.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/gst_ara_order_in_case_of_laxmi_health_care_center_iccu_order_2_11zon_compressed_1.pdf
Legibility of the scan, as read: high.
Prepared 14-10-2026.
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