The Tamil Nadu Authority for Advance Ruling (AAR) has held that the supply of medicines and consumables to in-patients during their admission in a hospital constitutes a composite supply of healthcare services and is exempt from the Goods and Services Tax (GST). The ruling provides clarity on a recurring compliance question for hospitals regarding the taxability of pharmacy supplies made to admitted patients.<\/p>\n
The case was brought by Maha Critical Speciality Division, Ambattur, Chennai, which operates a clinical establishment providing emergency, trauma, and specialty care.<\/p>\n
Want a deeper insight into the Income Tax Bill, 2025? Click here<\/a><\/p>\n The hospital pharmacy supplied medicines and consumables both to in-patients and out-patients. The applicant sought a ruling on whether medicines supplied to in-patients should be treated as part of healthcare services and therefore qualify for exemption under Notification No. 12\/2017-CT(Rate).<\/p>\n During proceedings, the hospital explained that in-patients receive an integrated package of services including surgery, medical treatment, nursing, food, implants, consumables, and medicines, all billed together under a single GST registration<\/a>. While GST was being charged on pharmacy sales, the hospital argued that supplies to admitted patients were inseparable from overall healthcare and should be exempt.<\/p>\n The AAR noted that under SAC 999311, \u201cin-patient services\u201d include surgical, gynaecological, psychiatric, pharmaceutical, nursing, laboratory, and rehabilitation services delivered under the direction of doctors. Relying on this classification and Circular No. 32\/06\/2018-GST, which clarified that food supplied to in-patients is part of healthcare services and not separately taxable, the authority concluded that the same principle extends to medicines and consumables.<\/p>\n