Understanding GST on Hospital Room Rent

Hospital rooms with rent above Rs. 5,000 per day attract a 5% GST. Explore detailed insights into tax exemptions and GST rules for hospital room rents in India.
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3 min
24-May-2025

GST, or Goods and Services Tax, is a comprehensive indirect tax levied on the supply of goods and services in India. In the healthcare context, GST is now applicable to non-ICU hospital room rents exceeding Rs. 5,000 per day, taxed at a rate of 5%. However, ICU and critical care rooms remain exempt, ensuring life-saving services stay financially accessible.

This move aims to standardize hospital accommodation pricing across the country. For patients and healthcare providers alike, understanding the scope and applicability of GST is now crucial for planning treatment and managing expenses.

Tip: Choosing the right health insurance plan can protect you from rising room rent and tax costs. With Bajaj Finserv Health Insurance, you can get up to Rs. 10 lakh cover starting at just Rs. 9.3/day—ideal if you’re opting for rooms that may attract GST.

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Impact of GST on hospital room rents

Until July 2022, room rents and most healthcare services were exempt from GST. However, with the change, here's how it impacts various stakeholders:

Room category and applicable GST:

Room Type

GST Rate

SAC Code

Rent below Rs. 5,000/day

0%

9993

Rent above Rs. 5,000/day (Non-ICU)

5% (No ITC)

9993

ICU/CCU/ICCU/NICU

0%

9993

 

Check: Room rent capping in health insurance

Key effects:

  1. Rising medical costs for patients: A Rs. 6,000/day room now costs Rs. 6,300 with GST. That Rs. 300/day can add up over a long stay.
  2. Operational challenges for hospitals: Segregating taxable vs non-taxable rooms requires updated systems and strict compliance.
  3. Insurance implications: GST inclusion may result in increased insurance premiums to accommodate higher room costs.

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How is GST calculated on hospital room rent?

GST is simple to compute but important to plan for. Here's how it works:

  • If your room rent is above Rs. 5,000 per day, GST applies at 5%.
  • Example: Rs. 6,000 room rent → Rs. 300 GST → Rs. 6,300 total/day.

Quick steps:

  1. Check if the room crosses the Rs. 5,000/day threshold.
  2. Multiply by 5% to get GST.
  3. Add to base rent for the total payable amount.

Some plans include GST under room rent capping, while others do not. With comprehensive health plans, you can opt for higher room rent capping so that taxes don’t become your burden during hospitalisation.

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Are there exemptions for GST on hospital room rent?

Yes, and these exemptions can reduce financial stress:

  1. ICU rooms: Fully GST-exempt, regardless of rent value.
  2. Rooms ≤ Rs. 5,000/day: No GST.
  3. Government hospitals: Often exempt from GST, though this may vary based on state policies.

These exemptions are designed to keep emergency and essential care affordable, especially for those not choosing premium services.

Not every plan covers ICU costs fully.

 Get health plans that ensures ICU expenses, including consumables and taxes, are comprehensively covered—so you and your family don’t have to compromise on care.

Impact on patients

Patients opting for premium rooms now face additional GST-related expenses. Here's the breakdown:

  • Total cost of care increases.
  • Insurance claims must be checked—does your policy cover this GST amount?
  • Out-of-pocket spending may rise if your plan has strict room rent sub-limits.

Choose a plan that aligns with your lifestyle. If you’re likely to opt for private rooms, look for high room rent caps or room-type flexibility. Bajaj Finserv plans offer this, with 24/7 claim support and cashless hospitalization across 8,000+ network hospitals.

Impact on healthcare providers

The 5% GST may seem minimal, but it brings administrative challenges:

  • Hospitals must update systems to segregate taxable vs non-taxable services.
  • No input tax credit (ITC) can be claimed on these charges, affecting hospital margins.
  • Bookkeeping and billing become more complex.

Hospitals now need robust compliance systems and awareness programs to ensure patients aren’t caught off guard by unexpected costs.

How to claim Input Tax Credit for hospital room rent?

Hospitals can claim Input Tax Credit (ITC) for services on which GST is charged—excluding exempt categories like ICU rooms.

Steps:

  1. Maintain detailed records of GST-charged inputs and services.
  2. Ensure timely GST filings.
  3. Exclude exempt services (like ICU) from ITC claims.

By optimising ITC use, hospitals can control costs—and potentially pass these savings to patients.

Recent changes in GST regulations for hospital services

The GST Council continues to revise norms to balance affordability with uniform taxation. Key changes include:

  • Rs. 5,000/day threshold clarified as the minimum for GST applicability.
  • Premium services likely to see stricter scrutiny, especially in luxury or private hospitals.

Staying informed helps both patients and providers plan better. And for those with evolving health needs, upgrading your insurance annually based on GST changes is a smart financial move.

Health insurance and GST on hospital room rent

Your health insurance can be your biggest ally—but only if it covers the right things.

What to keep in mind:

  1. Check your plan details: Does it cover GST on room rent?
  2. Out-of-pocket risks: GST may not be included if you’ve hit your room rent cap.
  3. Upgrade wisely: Plans with higher room rent limits or no sub-limits can prevent GST-related shocks.

Get flexible plans with room rent capping choices and GST-included coverage. Compare quotes, tweak your policy, and ensure you're never caught off guard during hospitalization.

Conclusion

The 5% GST on hospital room rents above Rs. 5,000/day introduces an extra cost that patients and providers must now factor in. While ICU and low-cost rooms remain exempt, patients opting for better rooms will see their hospital bills rise.

Health insurance now plays an even more critical role in bridging this gap. To avoid financial strain, ensure your policy covers GST-related expenses—or consider upgrading. With health plans from leading insurers, you can find plans tailored to your lifestyle and medical preferences, all while keeping room rent caps and tax liabilities in check.

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Frequently asked questions

What is the current GST rate on hospital room rent?
The current GST rate on hospital room rent is 5% for non-ICU rooms with a daily charge exceeding Rs. 5,000. ICU rooms are exempt from GST, ensuring critical care services remain more affordable for patients.

Can GST be waived for certain hospital services?
Yes, GST can be waived for certain hospital services, such as ICU room charges, which are exempt from GST. Additionally, rooms with a daily rent of Rs. 5,000 or below are also not subject to GST, providing relief for patients opting for more affordable accommodations.

How does GST affect health insurance claims related to hospital room rent?
GST can affect health insurance claims, as not all policies cover the 5% GST applied on room rent exceeding Rs. 5,000. Patients may need to pay the GST out of pocket if it’s not included in the policy's room rent coverage limit.

Are there any state-specific regulations regarding GST on hospital room rent?
GST is a national tax, and the rate on hospital room rent is uniformly applied across India. However, certain state-run hospitals or healthcare schemes may offer relief from GST, depending on local healthcare policies and exemptions for public services.

What is the GST on hospital room rent?

A GST rate of 5% is applicable to non-ICU hospital rooms if the daily rent exceeds Rs. 5000. This tax does not apply to ICU, CCU, ICCU, or NICU rooms, which remain exempt.

What is the GST rate for hospital services?

Healthcare services, including those provided by hospitals and doctors, are generally exempt from GST. However, a 5% GST applies to non-ICU hospital room rents exceeding Rs. 5000 per day. ICU and similar rooms are exempt.

Is GST applicable on room rent?

Yes, GST is applicable on hospital room rents exceeding Rs. 5000 per day at a rate of 5%. ICU and critical care units are exempt from this tax. This implementation aims to create consistency in healthcare taxation.

Is GST on labour charges 12% or 18%?

The GST rate on labour charges depends on the nature of the service. Typically, construction-related labour services attract 18% GST. However, certain types of contracts or services, such as those under affordable housing, may attract a lower rate of 12%.

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