You are here: Home » Economy & Policy » News » GST
Business Standard

AAR says GST be imposed on wellness centres depending on services offered

Case, relates to applicant Oswal Industries; authority observes that three types of rooms are offered by the applicant and therapy is strictly on residential basis

Goods and Services Tax | GST | GST regime

Indivjal Dhasmana  |  New Delhi 

GST, goods and service tax

Wellness facilities may become costlier for consumers with the Gujarat-based authority for advance rulings (AAR) calling for the imposition of 18 per cent (GST) on these services if such centres offer different packages depending on the category of rooms the customer has to choose from.

The ruling may raise many questions, said experts.

Explaining the case, Harpreet Singh, partner KPMG, said it relates to applicant Oswal Industries Limited, which operates Nimba Nature Cure Village near Gandhi Nagar in Gujarat. Its naturopathy centres offer physical, psychological and spiritual health services.

The applicant said that it was exempt from service tax in the pre-regime and now wanted to know if it will be eligible for exemption as well.

It should be noted here that hospitals and medical services come under the exempted category under AAR, however, observed that three types of rooms are offered by the applicant and therapy is strictly on residential basis. It said the rates charged by the applicant are solely dependent on the type of room opted by the customer.

ALSO READ: The GST compensation conundrum: Maharashtra leads in dues, shows data

As such, AAR holds that GST would be imposed on the composite supply of services in the same manner as is imposed on hotels, inn, guest houses and clubs. Eighteen per cent tax is imposed on this category. AAR said the element of accommodation becomes the primary activity in the entire package offered by Oswal.

Experts argued that hospitals also charge different rates on the basis of the category of rooms or wards. They wonder if they would also be charged GST.

Singh said," It is difficult to say whether the principle service is accommodation or attaining physical, psychological and spiritual health. One can argue that the main objective is to gain wellness and not stay at the rented accommodation.”

He further said while determination of consideration could be a key consideration, an argument may be taken that the same should not be the sole criteria to determine taxability, as done in the present ruling.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, September 15 2020. 21:07 IST