Bengaluru:  Complicating the issue of taxation of education and medical facilities, the Karnataka Authority for Advance Ruling (AAR) has recently ruled that Goods and Services Tax (GST) should be applicable on paid online medical contents.

Even though healthcare services and education are exempted from GST services, Karnataka AAR has clarified that online courses, which are specifically targeted at doctors and mandated by the medical council cannot be defined as medical facility even when the courses are mandatory for doctors.

"The paid education content, which is used by health care professionals or students to fulfill a mandatory demand by their professional body or institute is not exempt to tax under the provisions of the Central Goods and Services Tax Act or Karnataka Goods and Services Tax Act or Integrated Goods and Services Tax Act, 2017," ruled AAR.

Such rulings came while the AAR was dealing with an application by a proprietary registered under the provisions of Central Goods and Services Tax Act, 2017 as well as Karnataka Goods and Services Tax Act, 2017. 

The applicant provides services to the health care professional bodies such as State Medical Councils and Dental Councils, Institutes for Healthcare education, and hospitals.

Also Read: Good News: Healthcare Exempted from GST

Karnataka AAR had been approached by the applicant regarding the question of whether paid educational content, which is used by health care professionals or students for fulfilling a mandatory demand by their professional body or institute, should be exempted from tax.

Submitting that they assist professional bodies such as Karnataka Medical Council to fulfill their responsibility for ensuring career long learning of their members, the applicant referred to the fact that Indian Physicians need to obtain 30 CME credits every five years and for this the physicians need to be physically present at live events. 

Referring to the MCI guidelines on CME credit hours, the applicant further pointed out that "Each physician requires 41.1 hours per year to earn their six annual credits through live events, compared to six hours per year through online events. In a workforce of around 1.0 million physicians, this leads to a loss of over 35.1 million clinical hours per year."

In this context, the applicant submitted that they conduct online training in India which ultimately reduces the burden on physicians to 6 hours per year, meaning that 35.1 clinical hours remain available for clinical practice.

Referring to the KMC website that mentions that "all doctors, dentists and nurses in India have to fulfill career-long learning requirements to maintain their registration", the applicant submitted that the MoU with KMC mentions that the applicant hosts KMC endorsed accredited contents.

The applicant contended that as its content is recognized by a governmental body, it should be exempted from tax. Further, the applicant was of the opinion that Portfolio management is a service to healthcare professionals who have to fulfill a mandatory requirement and a service to a governing body such as KMC. Therefore, this service should also be exempted from tax.

Taking note of all these submissions, the AAR noted, "The transactions reveal that the recipient of services is health care professionals and it is not for obtaining a degree as prescribed by law."

"It is clear that the applicant is only acting as a liaison agent between the health care professionals on one side and their professional organizations and content providers on the other side and are charging their charges in addition to the content charges and fees of the professional bodies. The applicant per se does not provide any education to the professionals," further noted the Authority.

Thus, opining that the services provided by it shouldn't be exempted from tax, the AAR mentioned, "It is clear that the services provided by the applicant to the doctors and other healthcare professionals is not covered under any exemptions and hence is taxable."

"The paid education content, which is used by health care professionals or students to fulfill a mandatory demand by their professional body or institute is not exempt to tax under the provisions of the Central Goods and Services Tax Act or Karnataka Goods and Services Tax Act or Integrated Goods and Services Tax Act, 2017," ruled AAR.

"The fee collected for the portfolio management is also not exempted from tax under the provisions of the Central Goods and Services Tax Act or Karnataka Goods and Services Tax Act or Integrated Goods and Services Tax Act, 2017," it added.

To read the rulings of AAR, click on the link below.

https://medicaldialogues.in/pdf_upload/gst-kanataka-aar-170826.pdf