No GST On Supply Of Medicines To In-Patients By Pharmacy Unit As Part Of Treatment Provided By Hospital: AAR

The Tamil Nadu Bench of Authority of Advance Ruling (AAR) has held that supply of medicines and consumables used in the course of providing health care services to In-patients by the pharmacy unit of Hospital as part of the treatment provided by the hospital is exempt under Entry No.74 of the Notification No.12/2017- Central Tax (Rate) dated 28.06.2017, read with Section 8(a) of the CGST Act, 2017, as a composite supply of healthcare services. The bench of C. Thiyagarajan and B. Suseel Kumar has observed that from a conjoint reading of the Explanation of service' pertaining to Inpatient services' and the clarification above, it is evident that the exemption is applicable to a "Clinical Establishment", when services by way of diagnosis or treatment or care for illness, etc., to an in-patient are undertaken by such establishment under the directions of a medical doctor. The hospital is a 'Clinical Establishment' and it is clear that they are exempt under Sl.No.74 of Notification No.12/2017-C.T. (Rate) dated 28.06.2017, in respect of the supply of medicines and consumables to the in-patients while providing the composite supply of Healthcare services to them. The Applicant is a well established multi-speciality hospital providing a wide range of healthcare services to patients across various geographical platforms. The hospital offers in-patient and out-patient services, including consultations, diagnostics, surgeries, intensive care and allied medical services. They have stated that one of the integral parts of their hospital is in-house pharmacy, which is primarily responsible for dispensing medicines and consumables prescribed by the medical professionals. Its core function is to cater to the internal requirement of medicines and consumables for patients admitted to the hospital for treatment. In the case of in-patients, all required medicines, surgical items, and consumables are provided during the course of diagnosis and treatment as prescribed by doctors. These are essential for ensuring continuity of care and are directly linked to the therapeutic services being provided. The hospital raises a consolidated bill to the patient at the time of discharge, which includes charges for room rent, surgery, consultation, diagnostics, investigation and also the medicines and consumables used during the stay. These items are not billed separately or treated as distinct sales transactions. In fact, the pharmacy does not issue individual tax invoices for medicines provided to in-patients. The objective is not to run a retail pharmacy but to ensure timely availability of required medical items as part of the holistic healthcare services. The applicant sought the advance ruling on the issue whether supply of medicines and consumables used in the course of providing health care services to In-patients by pharmacy a unit of Dr. Kamakshi Memorial Hospital Put. Ltd., for Diagnosis or treatment during the patients' admission in hospital would be considered "Composite Supply of Healthcare Service" under GST and consequently avail exemption under Notification No. 12/2017, CT (Rate) read with section 8(a) of the GST Act. The AAR held that taxable supplies such as medicines, consumables, etc., provided to in-patients qualifies as a 'composite supply', since they are naturally bundled and are supplied in conjunction with the Healthcare services', which happen to be the principal supply. Therefore, supply of medicines and consumables including food to in-patients in the course of the treatment till the patient is discharged is a composite supply of health care services. Ruling Details Applicant’s Name: Dr. Kamakshi Memorial Hospital Private Limited Citation: JURISHOUR-506-AAR-2026(TN) Ruling Date: 09.02.2026 Click Here To Read Ruling Read More: 18% GST On Remediation of Waste Dump Sites At Various Location In Goa: AAR

No GST On Supply Of Medicines To In-Patients By Pharmacy Unit As Part Of Treatment Provided By Hospital: AAR

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