You may soon get separate bills for taxable and non-taxable components in bills that include services exempt under the goods and services tax (GST) regime.
The GST Council has decided to extend the unbundling of bills beyond healthcare for all categories of services currently exempt from the tax, such as education.
The proposal considered by the council was for healthcare.
“The view within the council was that the provision be extended to all exempt services,” a government official, familiar with the deliberations of the council, told ET.
The move is aimed at bringing more transparency in billing for consumers as also protecting the government’s revenues.
The GST Council had considered a proposal in respect of hospitals.
While healthcare services per se are exempt from GST except a few such as cosmetic surgery and hair transplant, medicines and consumables attract GST, with some under the maximum retail price regime.
There have been reports of hospitals charging consumers full maximum retail price (MRP) even though they had received discount and not paid full MRP. A bundled bill makes it difficult for consumers — and tax officials — to differentiate between GST paid and non-GST components. Tax officials feel this tax collected often doesn’t reach the government.
Last Saturday, the GST Council examined the suggestion that hospital bills be split between medicines and consumables and hospitalisation charges. This would ensure that the tax collected reaches the government.
The council backed the proposal and wanted it expanded to include other such services as well where similar practice of bundled invoice is followed.
Education services, for instance, could come under the new norm. While core education services are exempt from GST, goods and services clubbed but not incidental to education are taxed.
Tax experts said the decision to split the bill would help prevent litigations and disputes.
“The principles governing composite supplies and mixed supplies have certain common elements, while the tax treatment is completely different,” said M S Mani, partner at Deloitte India. “Hence, breaking down composite supplies, where feasible, into its constituent elements could be an option to avoid future litigation,” he said.
Experts, however, said the move would require a change in definition of composite supply.
“Raising one consolidated bill or separate is a commercial decision between the parties involved and also based on the practice being followed in a particular industry,” said Anita Rastogi, indirect tax partner at PwC. “If the government mandates separate billing, one would need to be mindful of the existing definition of composite supply which would still cover the bundled supply concept.”
In other words, Rastogi said, mere splitting of invoices would not achieve the objective. Instead, an amendment in the definition would be required.
Source : https://economictimes.indiatimes.com/news/economy/policy/lets-split-the-bill-gst-council-wants-more-services-unbundled/articleshow/67262662.cms