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5% GST On Hospital Room Rent And Its Impact On Your Bill

Team AckoSept 2, 2022

Did you know? The Goods and Services Tax (GST) Council has declared that 5% GST will be applicable on hospital rooms (non-ICU) with a daily room rent of Rs 5,000 or above. The 5% GST on hospital room rent has been in effect since July 18, 2022.

GST On Hospital Room Rent

This means:

  • No GST will be applicable if the room rent is less than Rs. 5,000

  • Intensive Care Unit (ICU) rooms will be exempt from 5% GST

Here is an overview of how your hospital bill could look like.

Impact On Hospital Bills Earlier Now
Room Rent Per Day Rs. 6,000 Room Rent Per Day Rs. 6,000
GST 0% GST 5%
Total For 3 Days Rs. 18,000 Total For 3 Days Rs. 18,900

Note: This is just an example to illustrate GST impact, actual calculation might vary based on applicable terms.

Your Hospital Bills May Get Costlier

Most people in India rely on expensive private healthcare, and either use their savings or insurance coverage to clear their medical bills. As of 2021, over 500 million Indians are covered by various insurance schemes. This has been particularly due to: 

  • Launch of affordable insurance plans in recent years 

  • Growing awareness about the importance of being insured

  • Rise of digital-first insurers

Though more and more people are lowering medical bills by opting for health insurance, not all is well. 

Why You Should Be Worried About The 5% GST On Your Hospital Room Rent

This tax hike can pinch a lot of people who are dependent on private healthcare. Moreover, insurance buyers may have to endure an increase in their insurance premium, as the insurer may also have to bear this additional cost. 

  • The services in the hospital rooms are part of the overall healthcare services which is currently outside the GST bucket.

  • Levying a 5 per cent GST rate on hospital rooms increases the tax burden on the people and in the healthcare sector. 

  • The GST Council made this decision as a part of an exercise for larger tax rate rationalisation. 

Oh, And One More Thing

This 5% GST will not be getting an input tax credit as of now, which means that this cannot be adjusted with the final tax you pay.

Frequently Asked Questions (FAQs)

Here’s a list of common queries related to GST hike with respect to room rent.

Who will have to pay the GST?

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Hospitalisation costs are usually taken care of by the insurer. This means that the GST charges will also have to be paid by your insurance company while settling the claim.

Will the premiums increase?

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Though there will be no direct impact on policyholders during claim settlement, if the 5% GST causes a rise in claims cost for the insurers, then health insurance premiums may go up in the near future.

What should policyholders do?

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In cases of co-pay, the policyholders  may have to bear a portion of the room rent cost, including the GST amount. To avoid paying the extra cost, it is suggested to purchase a health insurance policy that does have a room rent capping clause. Please read applicable policy wordings for precise details related to this clause.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary news sources on the internet, and is subject to changes. Please go through the applicable policy wordings mentioned in your policy, before making any insurance-related decisions.

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