GST On Hospital Room Rent

Piling up hospital bills is a financial burden for most people. On top of that, adding an extra tax on the room rent can level up the expenses faced. This is exactly what happened in the 47th meeting of the GST Council, which declared a levy of 5% GST on all hospital rooms that charge above Rs. 5000 per day. 

This additional tax has led to many new challenges for the patients’ families. From increased medical expenses to higher insurance premiums, rates have risen higher than expected for most. Continue reading to get more insights into the impact of GST on hospital room rent.

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.

This means:

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

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: 

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

With the 5% GST on the room rent, insurance companies are forced to upgrade their premiums for the policies covering hospital expenses. This happens because the companies try to cover the additional GST charged under the umbrella of their policies, and in doing so, the overall insurance coverage increases as well. To accommodate the increased expenses, a rise in insurance premiums is naturally seen. 

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 newfound taxation on hospital room rents has its perks and disadvantages. While for the government, the rooms charging Rs. 5000 constitute a small portion of the entire accommodation available, for the people, this addition has caused significant financial burdens. 

The 5% GST on these rooms has now resulted in pricier insurance premiums and other complexities. Hence, keeping updated on these changes can help prepare for unforeseen circumstances. 

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.