Mum AAR: 18% GST on subscription-based elder care

There is no GST exemption for payment for elderly-care programmes requiring a subscription, stated the Mumbai Authority for Advance Rulings ( Mum AAR).

These services are given to senior citizens staying alone. They include logistics support, care at homes, paying utility bills, running essential errands, social gatherings and medical checkups.

Any advance rulings are specifically addressed to the applicant alone. Still, these can form a base for understanding the implications on taxpayers into similar businesses and undergoing assessment.

M/s Snehador Social & Health Care Support applied for an advance ruling on the above matter of taxability with the Mumbai authority. It is a startup entity and offers three subscription packages for senior citizens to choose from based on their needs.

Senior citizens subscribers must incur an annual registration fee, a quarterly subscription fee and an upfront deposit that is refundable. The issue lies in identifying the nature of services the startup provides to senior citizens, whether it is ‘health care’ or ‘human health and social care’ services. The former is tax-exempt, whereas the latter is taxable at 18% GST.

Hence, any patient visits conducted by doctors and nurses are generally GST exempted but would not qualify for exemption if the startups mediate the services. The Mum AAR noted that these services must be given by medical practitioners, paramedics or clinical establishments to allow the exemption. However, the startup billed the services; hence, they cannot be exempt from GST.

A careful examination of the above scenario points us towards composite services. Here, more than one service is bundled. Suppose one of the services is exempt from GST while the rest are not. In that case, such exemption can be claimed only after meeting all the conditions for a particular service, not being a composite supply. In a composite supply, the taxation will depend upon the taxability of the principal supply. 

In this case, AAR pointed out that both services are provided for essential services and social/entertainment services to those senior citizens who have enrolled on the programmes. Accordingly, the exemption to health care service is not allowed for the applicant.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in