This blog is for the medical practitioners and hospital/nursing businesses in specifics. This is only an extract of the mega exemption list under Service Tax, and we have tried to bring this to your attention in a simpler format. We hope that this exemption is taken full advantage of, as far as the assesses falling under the purview of the same is concerned.  

Notification 25/2012 dated 20-06-2012 grant exemption to health care services provided by a clinical establishment, an authorized medical practitioner or para-medics and veterinary clinic in relation to health care of animals or birds.

“Health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any organization system of medicine and includes services by way of supply of meals for the patient or transportation of the patient to and from a clinical establishment. However, it does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.

All health care services shall not be exempt but only recognized systems of medicine are covered under exemption. Section 2(h) of the Clinical Establishments Act, 2010, the following systems of medicine are recognized systems of medicine:

1. Allopathy therapy
2. Yoga therapy
3. Naturopathy therapy
4. Ayurveda therapy
5. Homeopathy therapy
6. Siddha therapy
7. Unani therapy
8. Any other system of medicine that may be recognized by Central Government.

Allopathy is an expression commonly used by homeopaths and proponents of other forms of alternative medicine to refer to mainstream medical use of pharmacologically active agents or physical interventions to treat or suppress symptoms or pathophysiologic processes of diseases or conditions.The expression was coined in 1810 by the creator of homeopathy, Samuel Hahnemann (1755–1843).In such circles, the expression “allopathic medicine” is still used to refer to “the broad category of medical practice that is sometimes called Western medicine, biomedicine, evidence-based medicine, or modern medicine”.

Yoga is the physical, mental, and spiritual practices or disciplines which originated in ancient India with a view to attain a state of permanent peace.The term yoga can be derived from either of two roots, yujir yoga (to yoke) or yuj samādhau (to concentrate).

Naturopathy is a form of alternative medicine based on a belief in vitalism, which posits that a special energy called vital energy or vital force guides bodily processes such as metabolism, reproduction, growth, and adaptation.Naturopathy favors a holistic approach with non-invasive treatment and generally avoids the use of surgery and drugs.Among naturopaths, complete rejection of biomedicine and modern science is common.

Ayurveda is based on the historical foundation from the evidence of the earliest ayurvedic texts of the early centuries of the Common Era, or alternatively a description may take an ethnographic approach and focus on the forms of traditional medicine prevalent across India today. Much like the medicine of classical antiquity, Ayurveda had historically taken the approach of enumerating bodily substances in the framework of the five classical elements (Sanskrit [maha]panchabhuta, viz. earth, water, fire, air and aether. According to Ayurveda, there are seven tissues dhatu. They are plasma (rasa), blood (rakta), muscles (maṃsa), fat (meda), bone (asthi), marrow (majja), and semen (shukra).

Homeopathyis a system of alternative medicine created in 1796 by Samuel Hahnemann, based on his doctrine of like cures like, according to which a substance that causes the symptoms of a disease in healthy people will cure similar symptoms in sick people.Homeopathic remedies are found to be no more than a placebo, and homeopathy is widely considered a pseudoscience.

Siddha is one of the oldest medical systems known to mankind.Contemporary Tamizh literature holds that the system of Siddha medicine originated in Southern India, in the state of Tamil Nadu, as part of the trio Indian medicines – ayurveda, siddha and unani. Reported to have surfaced more than 10000 years ago,the Siddha system of medicine is considered one of the most ancient traditional medical systems.

Unani is a form of traditional medicine widely practiced by Muslims. It refers to a tradition of Graeco-Arabic medicine,which is based on the teachings of Greek physician Hippocrates, and Roman physician Galen, and developed into an elaborate medical System by Arab and Persian physicians, such as Rhazes (al-Razi), Avicenna (Ibn Sena), Al-Zahrawi, and Ibn Nafis.

“Authorised medical practitioner” means any medical practitioner registered with any of the Councils of the recognised system of medicine and includes medical professional having the requisite qualification to practice in any recognised system of medicine as per any law for the time being in force.

“Clinical establishment” means a hospital, nursing home, clinic, sanatorium or an 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 medicine, established and administered or maintained by any person or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.

Section 2(e) of the Clinical Establishments (Registration and Regulation) Rules, 2010 defines clinical establishment as a hospital, maternity home, nursing home, dispensary, clinic, sanatorium or an institution by whatever name called that offers services, facilities requiring diagnosis, treatment or care. For illness, injury, deformity, abnormality or pregnancy in any recognised system of medicine established and administered or maintained by any person or body of persons, whether incorporated or not; or (ii) a place established as an independent entity or part of an establishment referred to in sub clause (I), in connection with the diagnosis or treatment of diseases where pathological, bacteriological, genetic, radiological, chemical, biological investigations or other diagnostic or Investigative services with the aid of laboratory or other medical equipment, are usually carried on, established and administered or maintained by any person or body of persons, whether Incorporated or not, and shall include a clinical establishment owned, controlled or managed by

• The Government or a department of the Government;
• A trust, whether public or private;
• A corporation (including a society) registered under a Central, Provincial or State Act, whether or not owned by the Government;
• A local authority; and
• A single doctor,

But does not include the clinical establishments owned, controlled or managed by the Armed Forces constituted under the Army Act, 1950, the Air Force Act, 1950 and the Navy Act, 1957.

Literally, health implies the state of being free from illness or injury, a person’s mental or physical condition. It is a state of complete physical, mental and social well being and not merely an absence of a disease or infirmity. The organized provision of medical care to individuals or a community is called health care. The services in relation to medical care are called health services.

Paramedics are trained health care professionals, for example nursing staff, physiotherapists, technicians, lab assistants etc. They are accountable for their services when provided independently. Services by them in a clinical establishment would be in the capacity of employee and not provided in independent capacity and will thus be considered as services by such clinical establishment. Similarly services of assisting an authorized medical professional would be considered as services by such authorized medical professional only.

The services to be exempt must, therefore –

• be health care services
• be provided by –
• a clinical establishment, or
• an authorised medical practitioner, or
• para-medics

Interestingly, service of supply of meal and transportation of patient to and from clinical establishment is exempted from payment of service tax. The charges recovered for providing such food would also not be liable to be taxed as in the extended meaning of definition provision of supply of food is also considered as healthcare service.

Similarly, transportation of patients from one clinical establishment to another would also be considered as healthcare service.

Coming to the exclusion discussion, this notification excludes service of fair transplant cosmetic, hair transplant, plastic surgery and aesthetic surgery. The under listed are out of the purview of service tax exemption and therefore chargeable to service tax –

• Abdominoplasty
• Blepharoplasty
• Mammoplasty
• Breast Lift (Mastopexy)
• Buttock Augmentation
• Chemical Peel
• Labiaplasty
• Rhinoplasty
• Otoplasty
• Rhytidectomy
• Brow Lift
• Liposuction
• Laser Skin Resurfacing
• Orthodontics

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