Withdrawal of GST exemption on hospital equipment: a boon or bane for patients?

New Delhi: The import of equipment by government hospitals and those run by societies will be now subject to the full rate of Intra-State Goods & Service Tax (IGST), as existing concessional rate of 6 percent Countervailing Duty (CVD) will not be available from July 1, 2017.

The GST Council has decided to withdraw the exemption from CVD, equal to excise duty, which is currently available to certain hospital equipment and 100 percent Export Oriented Units (EOUs), on import of all goods. This will make them liable to pay Integrated Goods and Services Tax (IGST) once the new regime kicks in from the scheduled date.

Taking a balanced view on the subject, Dr Dharminder Nagar MD, Paras Healthcare mentions that the GST Council’s decision to withdraw the exemption from countervailing duty for certain hospital equipment and devices can be seen from two perspectives. “From the first angle,” he says, “it is certainly bad news for hospitals that import equipment as this will get costlier now. Of course the higher cost will in most likelihood be passed on to consumers.” “On the other hand,” he adds, “the decision seems to have taken with an intent to encourage hospitals to buy locally manufactured equipment which will boost the indigenous medical manufacturing sector.”

For the healthcare sector and the common people, in general, more important vis a vis GST is the need to place medical devices such as pacemakers, implantable cardioverter defibrillator (ICDs) and diagnostic equipment under lower tax slabs to allow treatment facilities become more affordable.

Dr Nagar wants the government to relook at the tax on most commonly used products such as sanitary napkins. “One pertinent issue I would like to raise is the fact that sanitary napkins as an article have been placed under the 18 percent tax slab, which is highly counterproductive. All commonly required medical and healthcare products should be placed under lower tax slabs under the GST,” he mentioned.