Dr. Mehta runs Eye & Glow Clinic. Mornings are surgical — cataracts, glaucoma, retinal procedures. Afternoons are walk-in aesthetic — Botox, fillers, laser pigmentation, occasional rhinoplasty consults referred to a partner surgeon.
FY 25-26: cataract + medical eye-care revenue ₹62L. Aesthetic / cosmetic revenue ₹14L. Total: ₹76L.
She thinks: "Healthcare is exempt under GST, so I don't need to register." She's half right. The other half is about to become an audit notice.
- Healthcare services by an authorised medical practitioner / clinical establishment are exempt from GST under Notification 12/2017-CT(R) Sl 74. This is the cataract / glaucoma / diabetes consult side.
- Cosmetic and aesthetic services are NOT exempt. Botox, fillers, hair transplant, rhinoplasty for vanity — these are 18% GST taxable services.
- "Aggregate turnover" for the GST registration threshold includes both exempt and taxable supplies. Dr. Mehta is at ₹76L total → way above ₹20L services threshold.
- Because part of her revenue is taxable (₹14L Botox), she must register. Cataracts stay exempt; Botox bills 18%. Two flavours, one GSTIN.
- The mixed-supply trap: if you bill cataract + Botox bundled at a single price, the entire bundle is taxed at the highest applicable rate (18%). Always bill them separately.
The exemption — exactly what's covered
Sl 74 of Notification 12/2017-CT(R) reads (paraphrased):
- (a) Health care services by a clinical establishment, an authorised medical practitioner, or paramedics;
- (b) Services provided by way of transportation of a patient in an ambulance.
The definition of "health care services":
Read literally:
- Treatment of illness/injury/abnormality → exempt. Cataracts ✓. Glaucoma ✓. Reconstructive surgery after trauma ✓.
- Cosmetic / aesthetic / plastic surgery → NOT exempt = 18% GST. Botox ✗. Fillers ✗. Hair transplant ✗. Liposuction ✗. Rhinoplasty for vanity ✗.
- The exception within the exception: if cosmetic surgery is to restore function or correct congenital defect / injury → back to exempt. Burn reconstruction, cleft-palate repair, post-mastectomy reconstruction — exempt.
- Room rent above ₹5,000/day (non-ICU) → 5% GST on the room rent portion. Hospital pharmacy items billed separately also get standard rates.
The four categories in Dr. Mehta's clinic
A — Treatment of illness
Exempt — Sl 74
Cataract surgery, glaucoma management, diabetic retinopathy check-ups, dry-eye treatment. 0% GST. Issue bill of supply (not tax invoice). No ITC on inputs related to these (toggle's a problem — see below).
B — Cosmetic / aesthetic
18% GST
Botox, fillers, laser pigmentation, chemical peels, vanity rhinoplasty, hair transplant. Issue full tax invoice at 18%. Claim ITC on inputs for this side.
C — Restorative cosmetic
Exempt (exception)
Burn reconstruction, post-trauma facial repair, cleft-palate, post-mastectomy. Same techniques as B, different indication. Exempt — but documentation matters (referral, diagnosis, indication on bill).
D — Room rent > ₹5,000
5% GST
Non-ICU room charges above ₹5,000/day (per bed). Applies to in-patient rooms in hospitals. Smaller eye clinics rarely cross this; multi-specialty hospitals do.
Mixed supply vs composite supply — the trap
Indian GST has two ways to handle "supplies bundled together":
Multiple supplies naturally bundled, with a "principal supply" clearly identifiable. Tax at the principal-supply rate. Example: cataract surgery + lens + post-op medication + 1-night stay — bundled naturally. Principal supply: cataract surgery (exempt). Whole bundle: exempt.
Multiple supplies bundled but not naturally — e.g., "Wedding glow-up package" = Botox + skin treatment + dental whitening + permanent eyeliner. Tax at the highest applicable rate (18%). Even if some items would be exempt standalone, bundling them at a single price makes everything 18%.
If she offers an "annual member" package for ₹50,000 that includes 2 eye exams (exempt) + 1 Botox session (taxable), and bills it as one line item — that's a mixed supply, taxed at 18%. The exemption on eye exams is lost in the bundle.
Fix: always bill exempt and taxable services separately. Same invoice number is fine; just separate line items with separate HSN/SAC and rates.
For Dr. Mehta and every mixed-practice clinic: one line per service, with HSN/SAC and rate, never bundle prices. A patient who does cataract + Botox in one visit should get one invoice with two line items: cataract @ 0% (bill of supply portion) and Botox @ 18% (tax invoice portion). Most billing software handles this; the legacy paper-receipt habit doesn't.
Dr. Mehta's actual position
- Cataract / medical eye-care: ₹62L → all exempt (Sl 74)
- Botox / fillers / aesthetic laser: ₹14L → taxable @ 18% → ₹2.52L IGST/CGST+SGST to collect
- Aggregate turnover: ₹76L (includes exempt + taxable) → above ₹20L threshold → mandatory registration
Once she registers, two things change:
- Botox / aesthetic bills add 18% on top — ₹14L becomes ₹16.52L collected; ₹2.52L deposited monthly via GSTR-3B.
- Cataract bills remain at the same price — still exempt. Issue "bill of supply" (not tax invoice) — mention exemption notification.
- ITC eligibility — only on inputs used for the taxable supplies. ITC on inputs for exempt services is blocked (Sec 17(2)). Common inputs (rent, electricity, receptionist's salary) need proportionate apportionment under Rule 42 — % of taxable turnover to total turnover.
Apportionment under Rule 42 — the messy bit
If Dr. Mehta pays ₹1L GST on common inputs (rent, internet, electricity) for the year, she can only claim ITC proportionate to taxable turnover.
Ratio: taxable / (taxable + exempt) = 14L / 76L = 18.4%.
ITC claimable on common inputs: ₹1L × 18.4% = ₹18,400. The rest (₹81,600) gets reversed to government as part of GSTR-3B.
This is the unloved part of multi-flavour businesses — most clinics over-claim ITC and get an ASMT-10 notice 14 months later.
The hospital's hidden ITC gotchas
- Doctor consultation fees paid by hospital to visiting consultants — RCM under Sec 9(3) doesn't apply for healthcare; this is forward-charge if consultant is registered.
- Hospital pharmacy — medicines sold to in-patients with surgery are part of the composite healthcare service (exempt). Medicines sold to walk-in retail customers = 5% / 12% (rate by HSN). Two flavours, separate billing.
- Diagnostic services (X-ray, MRI, blood test) provided by clinical establishment for treatment → exempt. Same lab providing tests for fitness certificate / pre-employment screening / insurance underwriting → taxable.
- OTs rented out to visiting surgeons for cosmetic procedures → taxable rent at 18%, regardless of underlying procedure.
Quick answers
If 100% of revenue is healthcare services by you as an authorised medical practitioner, all is exempt. You may still need to register if you make any taxable supplies (rental income, supply of equipment, training services) above ₹20L. Pure consultation practice — no registration.
Yes — "any recognised system of medicine in India" covers Ayurveda, Unani, Siddha, Homoeopathy, Naturopathy, Yoga. Practitioners must be registered with the relevant Council to qualify as "authorised medical practitioner".
Treatment of infertility is a recognised medical condition — exempt. But ancillary services like genetic screening for elective sex selection or surrogacy facilitation (legal scope is narrow anyway) — fall outside. Bill separately.
Taxable. The exemption is for "diagnosis or treatment". Issuing a certificate for fitness / driving licence / insurance / passport is not treatment. 18% GST.
Yes — the exception applies (reconstruction following injury / trauma). Document the indication clearly on the case sheet and invoice. If audited, you'll need the referral / diagnostic record to defend the exempt classification.
When you might want help
Two situations: (1) Mixed-revenue clinic / hospital figuring out the apportionment + ITC reversal monthly. (2) Cosmetic practices that grew past ₹20L and need clean registration + invoice templates + monthly GSTR.
Running a healthcare / aesthetic practice?
GST registration, taxable-vs-exempt classification per service, Rule 42 apportionment, monthly GSTR. Fixed monthly fee.
"Dr. Mehta" and her revenue split are composite illustrations. Specific classification depends on the procedure indication and your clinical establishment registration.