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    GST Applicability on Health Care Services


    1. Health is a state of complete physical, mental and social well-being. Public health care systems are organized by government for free or for subsidy to serve better healthcare, nutrition and standard of living of people. However, due to quality concerns and inadequate facilities, most of the Indian population are with no option but to use the private healthcare facilities which encompasses[1] 58% of hospitals and 81% of doctors. This article trials to spot on the GST implications on the services provided by private healthcare sector by considering the Central Tax rate Notification vide 12/2017 dated 28.06.2017. 


    1. Health care services are exempted from GST as per Central Tax Rate [CT(R)] Notification No. [NN] 12/2017 dated 28.06.2017 under the entry of SL No. 72 Heading 9993 and relevant extract is reproduced as under;

    Finance Bill (No.2) 2019 has inserted a new Section 194M (effective from 01.09.19) which provides deduction of tax at source @ 5% in relation to payment for carrying any work (including supply of labour for carrying out any work) in pursuance of contract or by way of fees for professional services by any Individual or Hindu Undivided Family [HUF] (collectively or individually referred as ‘Payer’) to a resident in case the payment or payments in aggregate exceeds Rs. 50 Lakhs during the financial year.

    Memorandum to Finance Bill (No.2) 2019 provides that the provisions of Section 194M is proposed to introduce to plough the loophole for possible tax evasion where in individual or HUF is carrying on business or profession which is not subjected to audit, since there is no obligation to deduct tax at source on such payment to a resident, even if the payment is for the purpose of business or profession[1]

    Sec 194M would apply in case of individual or HUF who are not required to deduct tax under Section 194C or 194J as the case may be. In other words, the provisions of Section 194M would apply only in situations where the payer is not obliged to deduct tax in terms of Section 194C or Section 194J. Hence, it assumes importance to understand under what circumstances payer is obliged to deduct tax under Section 194C or Section 194J to determine the applicability of Section 194M.

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    Internal audit function has potential to improve operating efficiency and improving the health of the organisation for achieving long-term sustainability for MSMEs

    What is MSME?

    Micro, Small and Medium Enterprises (MSME) constitute the backbone of an economy in maintaining an appreciable growth rate and in generating employment opportunities. This sector has been regarded as engine of economic growth and social development in many developed and developing countries. Contribution of MSMEs to the Indian economy in terms of employment generation, containing regional disparities, fostering equitable economic growth and enhancing export potential of the country has been quite phenomenal. Despite some infrastructural deficiencies and challenges like flow of institutional credit and inadequate market linkages, this sector has registered remarkable success about increase in number, quantum of investment, scale of production and overall contribution to national GDP.

    A lot of articles have been written in recent times depicting the trends in terms of role of Internal Auditors and increasing expectations of various stakeholders from the Internal Auditors. However, much of this information essentially provides perspectives on roles played by internal auditors in large organizations, which already have established systems and processes. The audit departments in these companies are fairly evolved with independent Charters and reporting to the Board Audit Committees.


    Section 17(5) of Central Goods & Services Tax Act, 17 (for brevity CT Act) deals with blocked credits. The said section starts with non-obstinate clause overriding the general provisions of Section 16 of CT Act which deals with credit entitlements. In other words, despite of the fact that a particular goods or input services is used for furtherance of business, the credit of tax paid on such items shall not be entitled if such item is mentioned vide Section 17(5). In this article, we try to analyse, the sub-section (h) of Section 17(5) with the help of certain recent advance rulings.

    Section 17(5)(h) states that input tax credit shall not be available with respect to goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. That is to say, if a supplier who has purchased certain goods and disposed the same by way of gift or free samples, the supplier is not entitled to take credit despite of the fact such gifts or free samples would yield additional business to the supplier. With the above basics in place, let us proceed to examine certain advance rulings to better understand the ambit of Section 17(5)(h).


    ‘Housing for All’ is one of the biggest agendas of the current government. To achieve this agenda, the government has been granting various tax sops have been extended from time to time to builders/developers and other stakeholders. In this article, we explore the some of the sops pertaining to taxation of affordable housing from the perspective of goods and services tax laws (GST laws) and income tax laws.

    Incentives under Income Tax Laws:

    For Seller:

    Section 80 IBA of Income Tax Act, 1961 (for brevity ‘Income Tax Act’) deals with deductions in respect of profits and gains from certain housing projects. Vide such section, where the gross total income of an assessee includes any profits and gains derived from business of developing and building housing projects, subject to certain conditions, 100% of such profits and gains are allowed as deduction.

    Such deduction is allowed to the assessee only if he satisfies all the conditions mentioned vide Section 80 IBA. Earlier the said deduction was extended vide Section 80 IB(10). Now, the deduction is provided to assessee vide Section 80 IBA. The conditions attached to the said section have undergone certain amendments vide Finance (No.2) Bill, 2019, which is dealt at appropriate place.

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