GST Exemption for Diagnostic and Genetic Testing Services
The Karnataka Authority for Advance Ruling confirmed that specific diagnostic and genetic testing services qualify for GST exemption as health care services.
- Ruling
- Advance Ruling No. KAR ADRG 05 / 2018 dated 21st March, 2018
- Dated
- 21 Mar 2018
- 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
- The company asked if their diagnostic services qualify as health care services.
- The authority ruled the company is a clinical establishment.
- Diagnostic and counseling services are exempt from GST under current notifications.
In short
The company asked the Karnataka Authority for Advance Ruling (AAR) if their genetic and oncology diagnostic services are exempt from Goods and Services Tax (GST).
What has changed
How it worked before
It was unclear whether businesses acting as intermediaries for international diagnostic testing could claim the same health care service exemptions as traditional hospitals.
What has changed
The authority decided that because the company provides a full cycle of diagnosis and counseling, they qualify as a clinical establishment. This means their diagnostic services are exempt from GST, lowering the cost of these medical tests for patients.
Who this affects
Diagnostic centers, genetic testing labs, and medical service providers who coordinate patient samples and counseling.
An example
A local diagnostic lab provides specialized blood testing and patient counseling. They wonder if they can stop charging GST on these services based on this ruling. They should consult a tax professional to see if their specific operations match the criteria used in this case, as this ruling does not automatically apply to them.
What you should do
Review your specific service model against the definitions of clinical establishments. Remember that an advance ruling only binds the company that asked and their specific tax officer; it is not a universal law for all businesses.
If you do nothing
If you stop charging GST without confirming your business model matches the ruling, you risk a tax audit. If the department disagrees with your interpretation, you will be liable for the unpaid tax, interest, and potential penalties.
The terms explained
- Clinical establishment
- A hospital, nursing home, clinic, or diagnostic center that provides medical services in a recognized system of medicine.
- Health care services
- Services provided by a clinical establishment for the diagnosis, treatment, or care of an illness, injury, or deformity.
- Advance ruling
- A formal decision from tax authorities on how GST laws apply to a specific business situation.
The ruling in detail
Authority for Advance Ruling
M/s SAYRE THERAPUETICS PRIVATE LIMITED
Advance Ruling No. KAR ADRG 05 / 2018 dated 21st March, 2018 · Karnataka
Questions before the authority
- Whether the Applicant qualifies as clinical establishment?
- Whether the services provided by the applicant qualifies to be health care services?
Facts
The applicant is a healthcare company involved in oncology and immunology diagnostics. They facilitate sophisticated genetic and microarray-based tests by collecting patient samples, coordinating with international laboratories, and providing pre- and post-test counseling. The applicant sought an advance ruling on whether these services qualify as exempt health care services.
Ruling
| Question | What the authority ruled |
|---|---|
| Whether the Applicant qualifies as clinical establishment? | Yes The applicant provides diagnostic services in the Allopathy system of medicine. |
| Whether the services provided by the applicant qualifies to be health care services? | Yes The services are exempt at a NIL rate of central tax. |
The Authority ruled that the applicant qualifies as a clinical establishment and that their services constitute health care services. Consequently, the intra-state supply of these services is exempt from tax under the specified notification.
Reasoning
The Authority determined that the applicant meets the definition of a clinical establishment under Clause 2(s) of Notification No. 12/2017-Central Tax (Rate) because they offer diagnostic facilities in a recognized system of medicine. Furthermore, the services provided, including diagnosis and counseling, fall under the definition of health care services per Clause 2(zg) of the same notification. Since the applicant is involved in the complete cycle of the testing process, their activities are **exempt from tax** under SL. No. 74 of the aforementioned notification.
Provisions relied on
- Section 98(4) of the Central Goods and Services Tax Act, 2017
- Section 98(4) of the Karnataka Goods and Services Tax Act, 2017
- Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017 (Clause 2(s), Clause 2(zg), and SL. No. 74)
For the practitioner
This ruling confirms that entities acting as intermediaries in the diagnostic process, including patient counseling and sample management, can qualify as clinical establishments. It provides a **favorable precedent** for diagnostic service providers to claim an exemption on their services. However, it is specific to the applicant's business model and does not provide a blanket exemption for all medical-related business activities.
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/05-sayre_therapeutics-aar-order.pdf
Legibility of the scan, as read: high.
Prepared 15-10-2026.
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