GST on Rent Paid by Hospitals: Karnataka Advance Ruling
Hospitals must pay GST on rent for leased premises even if their healthcare services are tax-exempt.
- Ruling
- Advance Ruling No. KAR ADRG 04 / 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
- Tathagat Health Care Centre asked if rent paid for hospital premises attracts GST.
- The authority ruled that rent for immovable property is a taxable service.
- No exemption exists for rent just because the hospital's output services are exempt.
In short
The company asked if they had to pay Goods and Services Tax (GST) on the rent for their hospital building. Because healthcare services are exempt from GST, they wanted to know if their rental costs should also be tax-free.
What has changed
How it worked before
Many businesses assumed that if their primary service was exempt from GST, their input costs—like rent—might also be exempt or eligible for special treatment.
What has changed
The authority confirmed that renting property is a taxable service under the law. This means hospitals must pay GST on their rent, and because they provide exempt services, they cannot claim this GST back as an input tax credit.
Who this affects
Private hospitals and clinics that operate from leased or rented commercial premises.
An example
A diagnostic center in Bangalore rents a building to perform medical tests. They wonder if they can stop paying GST on their monthly rent since their medical services are exempt. Based on this ruling, they must continue paying GST on their rent, as the tax authority views the rental service as separate from the medical services provided.
What you should do
If you are a hospital owner, you must budget for GST on your rent payments. Remember that an Advance Ruling only applies to the business that asked for it; your local tax officer is not legally bound by this specific decision.
If you do nothing
If you stop paying GST on rent based on this ruling, your landlord may face tax demands for unpaid dues. You could be held liable for the tax, interest, and penalties if your local tax officer decides your situation does not qualify for an exemption.
The terms explained
- Input tax credit
- The tax a business pays on its purchases or expenses that it can use to reduce the tax it owes on its own sales.
- Immovable property
- Legal term for land, buildings, or any permanent structure attached to the ground.
- Exempt service
- A service on which the government has decided no GST should be charged.
The ruling in detail
Authority for Advance Ruling
M/s TATHAGAT HEALTH CARE CENTRE LLP
Advance Ruling No. KAR ADRG 04 / 2018 dated 21st March, 2018 · Karnataka
Questions before the authority
- Whether GST is leviable on the rent payable by a Hospital, catering life saving services?
Facts
The applicant is a cardiology specialized hospital operating on premises taken on lease from an existing building. They provide health care services which are exempt from GST. The applicant sought a ruling on whether the rent paid for these premises is subject to GST.
Ruling
| Question | What the authority ruled |
|---|---|
| Levy of GST on rent paid by a hospital | GST is leviable No specific exemption is available for this service |
The authority ruled that GST is indeed leviable on the rent paid or payable by the applicant for the leased premises. It concluded that there is no exemption available for this service under the current GST regime.
Reasoning
The authority defined the service as renting in relation to immovable property under Notification No. 12/2017- Central Tax (Rate). It classified the service under SAC 997212, which is taxable under GST. The authority noted that there is no provision in the Act allowing for an exemption on an input service simply because the output service provided by the taxable person is exempt.
Provisions relied on
- Section 97 of CGST Act, 2017
- Section 98 of CGST Act, 2017
- Section 98 of KGST Act, 2017
- Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017
For the practitioner
This ruling clarifies that hospitals are **liable to pay GST on rent** for leased premises, regardless of the fact that their output health care services are exempt. It confirms that there is no input tax credit mechanism or exemption available to offset the tax burden on such rental inputs. Practitioners should advise clients that rental expenses for commercial premises remain taxable even for exempt service providers.
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/04-tathagat_heartcare_centre-aar-order.pdf
Legibility of the scan, as read: high.
Prepared 15-10-2026.
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