GST on Hospital and Healthcare Services in 2026: Exemptions, Room Rent, Pharmacy and Cosmetic Procedures

Whether you run a nursing home, a diagnostic lab or a cosmetic clinic, or you are simply reading a hospital bill and wondering why one line shows GST, the rules on GST on hospital services are narrower than most people assume. Treatment itself is exempt. A few things around it — expensive non-ICU rooms, aesthetic procedures, out-patient pharmacy sales and the canteen — are not. This guide sets out the 2026 position for patients, hospital owners and clinic managers: what the exemption covers, the room-rent rule, pharmacy and lab billing, the hospital's own tax costs, registration, and worked rupee examples, all checked against CBIC notifications in October 2026.

Quick answer

Health care services by a clinical establishment, an authorised medical practitioner or para-medics are exempt from GST under entry 74 of Notification 12/2017-CT(R) — consultation, surgery, nursing, ICU, diagnostics, ambulance, and medicines and food given to in-patients as part of treatment. Two exceptions matter most: a non-ICU room charged above ₹5,000 a day attracts 5% without ITC, and cosmetic or plastic surgery and hair transplants (unless reconstructive) attract 18%.

• ICU, CCU, ICCU and NICU beds are exempt at any price

• Out-patient pharmacy sales are taxable — 5% on most medicines

• Hospitals cannot claim input tax credit on costs used for exempt treatment

• GST 2.0 (22 September 2025) left the hospital exemption unchanged and cut bio-medical waste treatment to 5%

What the health care exemption covers

The exemption sits at entry 74 of Notification 12/2017-Central Tax (Rate), which exempts two things: health care services by a clinical establishment, an authorised medical practitioner or para-medics; and transportation of a patient in an ambulance by anyone else. Both are under heading 9993, "human health and social care services". The same notification, in entry 46, separately exempts services of a veterinary clinic for the health care of animals and birds, and entry 74A exempts rehabilitation, therapy and counselling by professionals recognised under the Rehabilitation Council of India Act at specified medical and educational establishments.

Three definitions in paragraph 2 of the notification decide almost every case. Health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India. It expressly includes transporting the patient to and from a clinical establishment, and expressly excludes hair transplant and cosmetic or plastic surgery, except where the surgery restores or reconstructs anatomy or functions of the body affected by congenital defects, developmental abnormalities, injury or trauma.

A clinical establishment is a hospital, nursing home, clinic, sanatorium or any other institution, by whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India. The definition goes on to include "a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases" — which is why standalone pathology labs and scan centres are covered. An authorised medical practitioner is a practitioner registered with a council of a recognised system of medicines and includes a professional qualified to practise under any law. Because the test is a recognised system of medicine, allopathic, Ayurveda, homoeopathy, Unani and Siddha practitioners are all within it.

The exemption is about the nature of the service, not the size or ownership of the provider. A 500-bed corporate hospital, a single-doctor clinic in a small town, a charitable dispensary and a district government hospital all supply exempt health care when they treat patients.

Hospital and clinic services — what is taxed

Service	GST	Basis
Consultation, surgery, nursing, OT, ICU, in-patient care	Exempt	Entry 74(a), Notification 12/2017
Diagnostic tests, pathology, imaging	Exempt	Entry 74(a) — diagnostic centre is a clinical establishment
Ambulance transport of a patient	Exempt	Entry 74(b)
Medicines, consumables and diet given to in-patients	Exempt as part of treatment	Composite supply; Circular 32/06/2018 (food)
Non-ICU room above ₹5,000 a day	5% without ITC	Serial 31A, Notification 11/2017
Cosmetic or plastic surgery, hair transplant (not reconstructive)	18%	Serial 31, Notification 11/2017
Out-patient pharmacy sales	Rate of the medicine — 5% for most	Notification 9/2025
Food sold to attendants and visitors	5% (no input tax credit)	Circular 32/06/2018; serial 7

Consultation, surgery, nursing, OT, ICU, in-patient care

GST

Exempt

Basis

Entry 74(a), Notification 12/2017

Diagnostic tests, pathology, imaging

GST

Exempt

Basis

Entry 74(a) — diagnostic centre is a clinical establishment

Ambulance transport of a patient

GST

Exempt

Basis

Entry 74(b)

Medicines, consumables and diet given to in-patients

GST

Exempt as part of treatment

Basis

Composite supply; Circular 32/06/2018 (food)

Non-ICU room above ₹5,000 a day

GST

5% without ITC

Basis

Serial 31A, Notification 11/2017

Cosmetic or plastic surgery, hair transplant (not reconstructive)

GST

18%

Basis

Serial 31, Notification 11/2017

Out-patient pharmacy sales

GST

Rate of the medicine — 5% for most

Basis

Notification 9/2025

Food sold to attendants and visitors

GST

5% (no input tax credit)

Basis

Circular 32/06/2018; serial 7

GST on hospital room rent above ₹5,000

From 18 July 2022, on the GST Council's recommendation, Notification 4/2022-CT(R) added a proviso to entry 74: the exemption does not apply to a clinical establishment's service of providing a room, other than an Intensive Care Unit, Critical Care Unit, Intensive Cardiac Care Unit or Neonatal Intensive Care Unit, where the room charges exceed ₹5,000 a day to a person receiving health care services. Notification 3/2022 simultaneously inserted serial 31A in the rate notification, taxing that room at 2.5% CGST plus 2.5% SGST — 5% in all — on condition that the hospital takes no input tax credit on the goods and services used to supply it.

Four points matter in practice. First, the test is the charge per day for the room. A private room billed at ₹5,000 a day is still exempt; one billed at ₹5,001 is taxable on the whole room charge, not just the excess. Second, intensive-care beds are carved out completely, so a ₹20,000-a-day ICU bed carries no GST. Third, only the room charge is taxed. Doctor visits, nursing, medicines, investigations and procedures during the same stay stay exempt, which is why a correctly prepared bill shows GST on one line and none on the rest. Fourth, GST 2.0 did not touch serial 31A: Notification 15/2025-CT(R), which rewrote many service entries from 22 September 2025, left both the ₹5,000 a day limit and the 5% no-credit rate unchanged.

Package billing is where hospitals get this wrong. When a hospital sells a fixed-price surgical package that includes a deluxe room, the room still has a daily value inside the package. Hospitals that use packages generally identify the room component and tax it separately where the daily room tariff is above the limit. If your package tariffs do not show a room value, set one using your published room tariff and document how you did it.

Pharmacy, medicines and food: in-patient versus out-patient

A hospital supplies medicines in two very different ways, and GST follows the difference. When an admitted patient receives drugs, implants, syringes and dressings as part of treatment, these are bundled with the treatment and supplied together with it. Under section 8 of the CGST Act, a composite supply is taxed as its principal supply — here, exempt health care. Advance rulings, including the Karnataka authority's 2024 ruling in Spandana Pharma, have taken this view for medicines and consumables supplied to in-patients. Advance rulings bind only the applicant, but the reasoning is widely followed.

Food follows the same logic, and here CBIC has spoken directly. Circular 32/06/2018-GST says food supplied to in-patients as advised by the doctor or nutritionist is part of the composite supply of health care and not separately taxable. Food supplied to out-patients, attendants or visitors is taxable, normally at the restaurant rate of 5% (no input tax credit). The circular also warns that a hospital which outsources patient meals pays the caterer's GST without credit, and that meals given by a hospital canteen to its own doctors and staff may be taxable even when free.

The out-patient pharmacy is a shop. A prescription filled for someone who is not admitted, or medicines bought by a relative from the hospital's counter, are sales of goods taxed at the medicine's own rate: 5% for most formulations and nil for the life-saving drugs notified in September 2025. The pharmacy needs a drug licence like any chemist, and its sales count towards the hospital's GST registration threshold. Our GST on medicine guide lists the HSN codes and rates.

Diagnostic labs, doctors, para-medics and ambulances

Standalone diagnostic centres often assume they must charge GST because they are "not hospitals". The definition says otherwise: a place established as an independent entity to carry out diagnostic or investigative services of diseases is itself a clinical establishment. Blood tests, urine cultures, X-rays, ultrasound, CT and MRI scans and histopathology done to diagnose illness are exempt health care. The same is true of preventive health check-up packages sold by labs and hospitals, which consist of diagnostic tests and a doctor's review.

Doctors are covered whether they practise alone or through a hospital. Circular 32/06/2018-GST addressed a common worry: hospitals engage senior doctors and consultants without an employment contract and pay them a share of the fee. CBIC clarified that services by senior doctors, consultants and technicians hired by hospitals, whether employees or not, are exempt health care, and that the whole amount charged to the patient — including the "retention money" the hospital keeps for nursing, infrastructure and emergency care — is consideration for exempt health care. A visiting consultant does not charge GST to the hospital on the professional fee.

Para-medics — nurses, physiotherapists, lab technicians and radiographers — also supply exempt health care when they provide care under the definition. Ambulance transport of a patient is exempt under entry 74(b) even when the operator is not itself a clinical establishment.

Is GST payable on this health bill?

Step 1

Diagnosis, treatment or care for illness, injury or pregnancy?

no → normally taxable

Step 2

Cosmetic surgery or hair transplant?

yes → 18% unless reconstructive

Step 3

Non-ICU room above ₹5,000 a day?

yes → 5% without ITC on the room

Step 4

Medicines sold to a non-admitted buyer?

yes → medicine's own rate

Step 5

Exempt health care

entry 74, Notification 12/2017

Cosmetic and aesthetic procedures at 18%

Aesthetic procedures fall outside the definition of health care services. Liposuction, rhinoplasty for appearance, breast augmentation, botox, fillers and hair transplants are taxed under serial 31 of Notification 11/2017 — "human health and social care services" not otherwise exempt — at 18%, with full input tax credit. GST 2.0 did not change this rate.

The exception is reconstructive work. Surgery that restores or reconstructs anatomy or function damaged by a congenital defect (a cleft lip or palate), a developmental abnormality, an injury or trauma (burns, accident scarring) remains exempt health care. The same procedure can fall on either side depending on why it is done, so the clinical notes matter. A dermatology clinic that offers both acne treatment and cosmetic peels supplies exempt and taxable services side by side and has to split its billing, its credits and, often, its staff costs.

Do not confuse these with salon services. A skin clinic run by a doctor that performs laser hair reduction is supplying a cosmetic medical procedure at 18%; a beauty parlour offering facials and waxing supplies beauty services under heading 9997, which moved to a separate 5% rate without credit in September 2025. Our GST on beauty services guide explains that entry.

For a business paying for these services, section 17(5)(b)(i) of the CGST Act blocks input tax credit on health services and on cosmetic and plastic surgery, unless the business itself supplies the same category of service onward or the law obliges an employer to provide it.

The hospital's own GST costs and input tax credit

Exemption is not free for the provider. Because a hospital's main output is exempt, it cannot claim input tax credit on the goods and services used to provide it. GST paid on medical equipment, implants bought for patients, consumables, housekeeping and security contracts, software, maintenance and construction becomes part of the cost of care. Where a hospital also has taxable outputs — cosmetic surgery, a pharmacy, rented shops — it claims credit only on inputs used for those, and reverses a proportion of common credits under rules 42 and 43. Rooms taxed under serial 31A carry no credit at all, by the terms of the entry.

GST 2.0 lowered some of these hidden costs from 22 September 2025. Many medical devices, diagnostic kits and reagents moved to 5%, and treatment or disposal of bio-medical waste by a common bio-medical waste treatment facility for a clinical establishment came down from 12% to 5% under the amended serial 32 of Notification 11/2017. Outsourced manpower, security and IT services remain at 18%.

A hospital's GST costs after GST 2.0

5%

Most medical devices, kits and reagents

from 22 Sep 2025

5%

Bio-medical waste treatment (CBWTF)

was 12%

18%

Housekeeping, security, IT contracts

no credit against exempt care

Nil credit

Rooms taxed at 5% without ITC

serial 31A condition

Hospitals also pay tax under reverse charge on some inward services, even though their sales are exempt. If the hospital is a business entity with turnover above the legal-services limit, it pays reverse-charge GST on advocate fees; a body corporate hospital pays reverse charge on security services bought from a non-corporate agency; and a registered hospital renting premises from an unregistered landlord pays reverse charge on commercial rent. Our reverse charge guide lists the entries.

Registration for hospitals, clinics and labs

Section 23 of the CGST Act says a person engaged exclusively in supplying goods or services that are wholly exempt need not register. A doctor's clinic or a diagnostic lab that only treats and tests patients therefore needs no GSTIN, however large its fees.

Most hospitals are not that pure. Once they make any taxable supply — a single room above the limit, a cosmetic procedure, an out-patient pharmacy, a canteen selling to visitors, or rent from an ATM or a shop on the campus — the ordinary threshold applies. Aggregate turnover includes exempt supplies, so a hospital with ₹8 crore of exempt treatment and ₹6 lakh of canteen sales has aggregate turnover well above ₹20 lakh and must register, even though tax is due only on the ₹6 lakh. The threshold is ₹10 lakh for service providers in the special category states that use the lower limit. Our GST registration guide walks through the application.

Registered hospitals file returns like any other business, report exempt turnover in GSTR-3B and GSTR-1, and show the room-rent tax and other taxable sales separately. Exempt supplies are reported too — leaving them out understates aggregate turnover and distorts the credit-reversal calculation.

Worked examples in rupees

A four-day stay in a private room. A patient in Pune is admitted for an appendectomy. The bill shows a private room at ₹6,000 a day for four days (₹24,000), surgeon and anaesthetist fees of ₹60,000, OT charges of ₹25,000, medicines and consumables of ₹18,000 and investigations of ₹9,000. Only the room is taxable: 5% of ₹24,000 = ₹1,200, split as ₹600 CGST and ₹600 SGST. Everything else — ₹1,12,000 — is exempt. The total bill is ₹1,37,200.

The same stay in a ₹4,500 room or the ICU. If the patient takes a twin-sharing room at ₹4,500 a day, the room is under the limit and the whole bill is exempt. If two of the four days are in the ICU at ₹18,000 a day, those two days are exempt regardless of price; only the two private-room days at ₹6,000 attract tax, ₹600 in all.

A cosmetic clinic in Bengaluru. A patient pays ₹1,50,000 for a rhinoplasty done purely for appearance. The clinic charges 18%: ₹27,000, for a total of ₹1,77,000, and can claim credit on the inputs used. If the same surgery corrected a nasal deformity from a road accident, it would be reconstructive, exempt and billed at ₹1,50,000 — but the clinic would lose credit on the inputs for that case.

A diagnostic lab. A standalone lab in Lucknow bills ₹3,200 for a full-body check-up of blood tests and an ultrasound. It is a clinical establishment carrying out diagnostic services, so there is no GST. If the lab sells nothing taxable, it does not need to register.

A hospital's equipment purchase. A nursing home buys a ₹40 lakh ultrasound machine at 5% — ₹2,00,000 of GST. Because the machine is used for exempt diagnosis, the ₹2,00,000 is a cost, not a credit. Before September 2025, at 12% or 18% depending on classification, the hidden tax would have been far larger.

Work out GST on a hospital room above the limit

Sales (Add GST)Purchase (Remove GST)Price Comparison

AmountGST Rate

0%3% (Gold / silver)5%18% (Standard)40% (Sin / luxury)

Transaction Type

Intra-state (CGST + SGST)Inter-state (IGST)

Base Amount (Before GST)₹24,000.00

CGST (2.5%)₹600.00

SGST (2.5%)₹600.00

Total GST (5%)₹1,200.00

Total Amount (Including GST)₹25,200.00

Open the full GST Calculator (PDF, save, compare)

Health insurance, claims and the 57th Council

Patients often confuse GST on the hospital bill with GST on their insurance premium. From 22 September 2025, Notification 16/2025-CT(R) exempted individual health insurance and individual life insurance policies, including family floaters, through new entries 36C and 36D. Group health policies bought by employers still attract 18%. Claims paid by an insurer to a hospital are not taxed separately: the hospital's supply is to the patient and is exempt to the same extent as if the patient paid directly. Our GST on health insurance guide covers premiums in detail.

At its 57th meeting on 8 October 2026, the GST Council recommended removing the section 17(5) block on input tax credit for health and life insurance, among other items, according to published summaries. That change has not been notified as of October 2026; until it is, businesses cannot claim credit on group health premiums except where a law obliges the employer to provide the cover. The recommendations did not change the hospital exemption or the room-rent rule.

Common mistakes and how they are fixed

Charging GST on the whole bill because the room is taxable. Only the room line is taxable. If a hospital has charged 5% on medicines and doctor fees in the same bill, it should issue a credit note, refund the patient and correct its returns.

Ignoring the ICU carve-out. Some billing systems apply the room-rent rule to all beds above ₹5,000. ICU, CCU, ICCU and NICU are excluded and must be mapped as exempt in the hospital management software.

Taking credit against the 5% room tax. Serial 31A allows no input tax credit for rooms. Hospitals that set off credits against this output tax face a demand with interest at 18% a year.

Treating the out-patient pharmacy as exempt. Counter sales to non-admitted buyers are taxable goods. Separate the in-patient issue register from retail sales and invoice retail sales with HSN codes.

Missing reverse-charge payments. A hospital that thinks it has "nothing to do with GST" may still owe reverse-charge tax on legal fees, security services or rent. Officers compare these expense heads in the accounts with GSTR-3B.

Hospital GST review checklist

0/8

• Room tariff master: every non-ICU room above ₹5,000 a day flagged as taxable at 5% without ITC
• ICU, CCU, ICCU and NICU tariffs mapped as exempt
• Package tariffs show a separate daily room value
• Cosmetic procedure list with clinical reasons recorded for reconstructive cases
• Pharmacy split between in-patient issues and retail counter sales
• Canteen sales to visitors and staff billed with GST
• Reverse-charge expenses (legal, security, rent) reviewed monthly
• Rule 42/43 reversal worked out for common credits

Share Print

Official links

• Notification 12/2017-CT(R) — service exemptions (entry 74)Original text and definitions
• Notifications 15/2025 and 16/2025-CT(R) — GST 2.0 services changesGazette of India, 17 September 2025
• Notification 9/2025-CT(R) — goods ratesMedicines and medical devices
• Circular 32/06/2018-GSTConsultants, retention money and patient food
• CGST Act section 17 — blocked creditsSection 17(5)(b)(i)

What to do next

If you run a hospital or clinic, pull your room tariff, package list and pharmacy sales register and check each against the table above; most errors show up in the room master and the pharmacy. If you are a patient, a correct bill should show GST only on a non-ICU room above ₹5,000 a day, on cosmetic work, or on things you bought separately. Read our GST on medicine guide for pharmacy rates and the GST exemptions guide for the wider list, and use the GST calculator to check any line.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Is GST charged on hospital bills?

Mostly no. Health care services by a clinical establishment, an authorised medical practitioner or para-medics are exempt under entry 74 of Notification 12/2017-Central Tax (Rate). That covers consultation, surgery, nursing, ICU, tests and medicines and food given to in-patients as part of treatment. The main exceptions are non-ICU rooms charged above ₹5,000 a day, which attract 5% without ITC, and cosmetic procedures, taxed at 18%.

What is the GST on hospital room rent?

A room (other than ICU, CCU, ICCU or NICU) charged at more than ₹5,000 a day to a patient receiving treatment attracts 5% without ITC, and the hospital cannot claim input tax credit for it. Rooms at or below that figure, and all intensive-care beds whatever their price, remain exempt. The rule has applied since 18 July 2022 and was not changed by GST 2.0 in September 2025.

Is GST applicable on diagnostic and pathology lab tests?

No, in most cases. The definition of clinical establishment expressly includes a place set up, independently or as part of another establishment, to carry out diagnostic or investigative services of diseases. Blood tests, scans, X-rays and pathology reports for diagnosing illness are therefore exempt health care, whether done in a hospital or a standalone lab. Tests unconnected with diagnosis or treatment of illness should be checked separately.

Is GST payable on cosmetic surgery and hair transplant?

Yes. The definition of health care services excludes hair transplant and cosmetic or plastic surgery, unless the surgery restores or reconstructs anatomy or body functions affected by congenital defects, developmental abnormalities, injury or trauma. Purely aesthetic procedures fall under heading 9993 and attract 18%. Reconstructive surgery after an accident or for a cleft lip stays exempt.

Do medicines bought from a hospital pharmacy attract GST?

It depends who buys them. Medicines and consumables supplied to an admitted patient as part of treatment form part of the exempt health care package. Medicines sold over the counter to out-patients or visitors are a separate sale of goods and carry GST at their own rate — 5% for most medicines since 22 September 2025, and nil for the notified life-saving drugs.

Does a hospital need GST registration?

A hospital that supplies only exempt health care need not register, because section 23 of the CGST Act excludes persons supplying only exempt services. Most hospitals, however, also make taxable supplies — room rent above the limit, cosmetic procedures, an out-patient pharmacy, canteen sales to visitors or rent from shops. Exempt income counts towards aggregate turnover, so once total turnover crosses the threshold, registration is needed.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 11 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Notification No. 12/2017–Central Tax (Rate), 28 June 2017 (service exemptions) — original text — CBIC · accessed 11 October 2026
2. 2.Notification No. 12/2017–State Tax (Rate), consolidated as amended (Telangana Commercial Taxes Department) — Commercial Taxes Department, Government of Telangana · accessed 11 October 2026
3. 3.Notification No. 11/2017–State Tax (Rate), consolidated as amended (Telangana Commercial Taxes Department) — Commercial Taxes Department, Government of Telangana · accessed 11 October 2026
4. 4.Notification No. 15/2025–Central Tax (Rate) and 16/2025–Central Tax (Rate), Gazette of India, 17 September 2025 — Ministry of Finance (Gazette of India) · accessed 11 October 2026
5. 5.Notification No. 9/2025–Central Tax (Rate), Gazette of India, 17 September 2025 — Ministry of Finance (Gazette of India) · accessed 11 October 2026
6. 6.Circular No. 32/06/2018-GST, 12 February 2018 — CBIC (GST Council website) · accessed 11 October 2026
7. 7.CGST Act, 2017 — section 17 (blocked credits) — CBIC Tax Information Portal · accessed 11 October 2026
8. 8.56th GST Council press release — rate changes (September 2025) — GST Council · accessed 11 October 2026
9. 9.Indirect Tax Alert — Recommendations of the 57th GST Council meeting (9 October 2026) — BDO India · accessed 11 October 2026
10. 10.Retention money charged by hospitals is towards healthcare services — Karnataka AAR (Spandana Pharma, KAR ADRG 05/2024) — Taxo.online · accessed 11 October 2026