With healthcare prices going up in northeast alongwith the rest of India, the Goods and Services Tax (GST) Council is mulling a proposal to make billing charges separately for medicines and hospitalization.
This move is expected to benefit consumers as it will make hospital bills more transparent and also help plug any leakage in GST collection from healthcare providers.
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The proposal will be taken up for discussion by the GST council on Saturday.
Hospital bills typically include charges for both medicines and hospital services together.
Even though medicines and consumables attract GST under the Maximum Retail Price (MRP) regime, hospitalization services normally do not face tax.
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Tax authorities are worried that hospitals could be charging in-patients for GST on medicines, but the tax may not be reaching the exchequer due to bundling of bill of hospitalisation charges and medication, reports The Economic Times.
Tax authorities suspect that patients are sometimes charged full MRP for medicines even though the hospitals may have procured the drugs cheaply.
The tax authorities have visited a few big hospitals in some cities to learn about the practices followed by them.
Unbundling hospital bills implies unregistered healthcare service providers would have to register with GST authorities, collect tax and deposit it.
Some healthcare providers have been pitching for a 5% GST because in the absence of input tax credit, they now end up absorbing taxes paid on goods purchased from vendors. Input tax credit is not allowed as healthcare services are exempt from GST.
Healthcare services are normally exempted from GST, except for cosmetic surgery and hair transplant.
The GST Council is expected to consider a slew of measures to further simplify the tax regime.