Kerala AAR rules-Composite supply of healthcare services will not attract GST.


  • In a recent ruling, Kerala authority of advance ruling (AAR) ruled that the supply of medicines, implants and consumables, surgical items, stents and even food provided to the admitted patients is a composite supply, the principal supply being health care services.
  • A composite supply of health care services is exempt from the charge of GST.

The applicant, M/S Thomas Hospital, sought an advance ruling on whether the provision of medicines, surgical implants, stents, and other such items to the admitted patients be considered as a composite supply of health care services. 

Facts of the case- 

  • This hospital is a multispecialty hospital. They provide health care services with the help of doctors, nurses, lab technicians, dieticians etc., who work for the hospital. Patients are admitted to the hospital.
  •  Doctors and nurses provide medical help, advice, and other required health care services to them. 
  • Dieticians prescribe diet and food is also provided in-house to some patients. Although the dietician services are not provided to every patient, they are provided to those who opt for them or those who are prescribed for by the doctors. 
  • The medicines and surgical items that are given to these in-patients through the pharmacy are administered and managed by hospital staff. All the other medications, consumables, food, stay facility etc., is provided as required by the health of the inpatients. The hospital staff procures these from the pharmacy and provides them to the patient to better their health. The hospital also provides lab facilities where inpatients are taken to. 
  • There is another pharmacy attached to the hospital that provides medicines and other consumables to the outpatients. The consumables that the in-pharmacy provided and the mess is provided strictly by the hospital staff directly to the patients as prescribed for the treatment. The hospital charges the inpatients for these services.

The applicant sought an advance ruling for whether these services would be considered as composite supply of healthcare services and further be exempt from GST.


Kerala AAR ruled that the supply of medicines, consumables, implants, surgical equipment, stents, food provided to the inpatients admitted to the hospital and even lodging facilities, rent, dietician charges and lab charges will be considered as a composite supply of healthcare services. Furthermore, a composite supply of health care services is exempt from the charge of GST as per Notification No.12/2017 Central Tax (Rate) dated 28.06.2017 read with Section 8(a) of GST.

AAR rulings provide further clarifications by resolving practical problems faced by taxpayers. They can create significant changes in GST execution. We post about AAR rulings from time to time. You can go through our blog to find out more about the recent changes in tax regulations. Read about the recent AAR ruling 28% GST applicable on track assembly-a motor vehicle accessory. 

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