Healthcare Exemption: Entry 74 and the ₹5,000 Room Proviso

Healthcare Exemption explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

Entry 74 is one of the widest exemptions in GST — the entire amount a hospital charges a patient, including the money it retains and the fees it pays its doctors. Then a 2022 proviso cut one hole in it, and it is the hole that generates the disputes.

Entry 74 exempts (a) health care services by a clinical establishment, an authorised medical practitioner or para-medics, and (b) transportation of a patient in an ambulance other than those in (a). The proviso, inserted by Notification No. 3/2022-CT(R) dated 13.07.2022 w.e.f. 18.07.2022, removes services by a clinical establishment by way of providing a room — other than ICU, CCU, ICCU or NICU — having room charges exceeding ₹5,000 per day to a person receiving health care services; those are taxable at 5% without input tax credit. Entry 46 separately exempts veterinary clinic services for animals or birds.

The three definitions that carry the entry

"Health care services" — para 2(zg): *"any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, **but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma."*

"Clinical establishment" — para 2(s): "a hospital, nursing home, clinic, sanatorium or any other institution by whatever name called, that offers services or facilities requiring diagnosis or treatment or care… in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases."

"Authorised medical practitioner" — para 2(k): "a medical practitioner registered with any of the councils of the recognised system of medicines established or recognised by law in India, and includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India."

"Paramedics" is undefined. The Handbook describes them as "trained health care professionals — for example nursing staff, physio-therapists, technicians, lab assistants etc. Generally, paramedics assist the doctors in treatment or care of patients."

Two features of the definitions do most of the work. "Any recognised system of medicines in India" covers Ayurveda, Unani, Siddha, Homoeopathy and Yoga as well as allopathy. And cosmetic and plastic surgery is excluded unless restorative or reconstructive for congenital defects, developmental abnormalities, injury or trauma.

What "the entire amount" means

The clarification the Handbook records is unusually generous, and it settles two recurring arguments at once:

"hospitals also provide healthcare services. The entire amount charged by them from the patients including the retention money and the fee/payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt."

Retention money is not a separate service. Where a hospital bills the patient and pays part over to a consultant, the difference it keeps is part of the exempt healthcare supply, not a facilitation fee.

And the doctors are exempt too. Per Circular No. 32/06/2018-GST dated 12.02.2018: "services provided by senior doctors / consultants / technicians hired by the hospitals, whether employees or not, are healthcare services and are exempt."

"Whether employees or not" is the operative phrase. A visiting consultant on a fee-share arrangement is supplying healthcare services, not consultancy.

The ₹5,000 room proviso

The exemption does not apply to services by a clinical establishment by way of providing a room — "other than Intensive Care Unit (ICU) / Critical Care Unit (CCU) / Intensive Cardiac Care Unit (ICCU) / Neo natal Intensive Care Unit (NICU)" — "having room charges exceeding ₹5,000 per day to a person receiving health care services."

Such services are taxable at 5% under Notification No. 3/2022-CT(R) dated 13.07.2022, "provided that the credit of input tax charged on goods and services used in supplying the service has not been availed."

Four features to note. The carve-out is for the room charge, not the whole bill. Intensive care of every named kind is excluded from the carve-out, so an ICU bed at any rate remains exempt. The trigger is "exceeding" ₹5,000, so exactly ₹5,000 stays exempt. And the 5% comes without ITC, so it is a real cost to the hospital, not a pass-through.

Food, and the composite supply line

"Health care services provided by the clinical establishments will include food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may be outsourced."

Two outcomes:

• Outsourced: "there should be no ambiguity that the suppliers shall charge tax as applicable and hospital will get no ITC."
• In-house: "If hospitals have their own canteens and prepare their own food then no ITC will be available on inputs including capital goods and in turn if they supply food to the doctors and their staff; such supplies, even when not charged, may be subjected to GST."

And the line that decides the patient's food: "Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable."

Ambulances, twice over

Clause (b) exempts transportation of a patient in an ambulance other than services already covered by clause (a) — so ambulance services by anyone, not only a clinical establishment, are exempt.

And where the ambulance service is supplied to a State Government, a different pair of entries applies. Per Circular No. 51/25/2018-GST dated 31.07.2018, ambulance services are an activity in relation to functions entrusted under Articles 243G and 243W, so services "provided by PSPs to the State Governments by way of transportation of patients on behalf of the State Governments against consideration in the form of fee or otherwise" are exempt under entry 3 if a pure service, and entry 3A if a composite supply with goods not exceeding 25%. Entries 3 and 3A →

Two exemptions that were withdrawn

Both went on the same date — 18.07.2022, by Notification No. 4/2022-CT(R) dated 13.07.2022:

Cord blood banks (entry 73). "services provided by the cord blood banks by way of preservation of stem cells or any other service in relation to such preservation" — including "sorting, labelling, preserving of stem cells in the chemicals".

Common bio-medical waste treatment facilities (entry 75). Services by operators of a common BMW treatment facility to a clinical establishment by way of treatment or disposal of bio-medical waste or processes incidental thereto.

Both were withdrawn, and the Handbook notes the original policy for the second: "In order to increase the reuse, reduce the wastage of bio-medical waste, the Government had exempted the operators."

Entry 74A: rehabilitation professionals

Exempt: services by rehabilitation professionals recognised under the Rehabilitation Council of India Act, 1992 by way of rehabilitation, therapy or counselling and such other activity as covered by that Act, at medical establishments, educational institutions, rehabilitation centres established by the Central Government, State Government or Union territory, or an entity registered under section 12AA or 12AB of the Income-tax Act.

Two conditions. The professional must be RCI-registered — the Council maintains a Central Rehabilitation Register of qualified professionals — and the service must be delivered at one of the four named kinds of place. The same therapy delivered at a private clinic outside those categories is not within entry 74A, though it may fall within entry 74 if provided by a clinical establishment or authorised medical practitioner.

Key takeaways

• Entry 74 exempts health care services by a clinical establishment, authorised medical practitioner or para-medics, and ambulance transportation.
• The entire amount charged, including retention money and doctors' fees, is exempt; doctors and consultants are exempt whether employees or not — Circular No. 32/06/2018.
• Cosmetic and plastic surgery is excluded unless restorative or reconstructive.
• The proviso taxes rooms above ₹5,000 a day at 5% without ITC from 18.07.2022 — but ICU, CCU, ICCU and NICU are outside the carve-out.
• In-patient food on medical advice is part of the composite exempt supply; food to out-patients, attendants and visitors is taxable.
• Cord blood banks and common bio-medical waste facilities lost their exemptions on 18.07.2022.
• Entry 74A covers RCI-recognised rehabilitation professionals at four named kinds of place.
• Entry 46 exempts veterinary clinic services for animals and birds.

Read next

• An Exempt Supply Inside a Composite or Mixed Supply
• Entries 3 and 3A: Pure Services and the 25% Rule
• Education Exemption: Entry 66, Services By and To an Institution

Disclaimer: Positions stated as on 5 September 2026, based on entries 46, 73, 74, 74A and 75 and paras 2(k), 2(s) and 2(zg) of Notification No. 12/2017-Central Tax (Rate), Notification Nos. 3/2022 and 4/2022-Central Tax (Rate) dated 13 July 2022, the Rehabilitation Council of India Act, 1992, and Circulars No. 32/06/2018-GST and 51/25/2018-GST, as reproduced in the ICAI Handbook on Exempted Supplies under GST (April 2025).