SAC Code for Hospitals, Diagnostic Labs & Health Checkup Services

The Indian healthcare sector is a pillar of our society, and for it to operate smoothly, compliance with financial regulations like the Goods and Services Tax (GST) is non-negotiable. A critical part of this compliance is understanding and correctly using the SAC code for hospitals, clinics, and diagnostic centers. This system, while seemingly complex, is essential for accurate invoicing and tax filing. This comprehensive guide is designed to demystify the SAC code India for health services, breaking down the specific codes for different medical services and explaining their GST implications. We will provide a clear overview of the SAC codes explained for hospitals to ensure your healthcare facility remains fully compliant.

What Are SAC Codes and Why Do They Matter for Healthcare Providers?

Understanding the framework of the Services Accounting Code (SAC) is the first step toward seamless GST compliance for any healthcare provider in India. This system is not just about filling a box on an invoice; it’s the language that the GST system uses to identify and classify services, determining how they are taxed. For hospitals, clinics, and labs, using the correct SAC code ensures transparency, avoids penalties, and streamlines the entire tax filing process, allowing you to focus on what matters most—patient care.

Decoding the Services Accounting Code (SAC) System

The Services Accounting Code, or SAC, is a uniform classification system developed by the service tax department for the identification of services. Under the GST regime, every service provided in India is categorized under a specific 6-digit SAC code. This structure is logical and easy to understand once you know the basics.

The code is broken down as follows:

The first two digits are always 99, which signifies that the code represents a service.
The next two digits represent the major nature of the service. For all human health and social care services, this is 93.
The final two digits specify the detailed nature of the service. For instance, 11 represents in-patient hospital services.

So, for a hospital providing in-patient care, the code 999311 is used. This structured approach creates a standardized method for identifying services across the country, making tax administration more efficient for both businesses and the government.

The Role of SAC Codes in GST Compliance

The correct application of SAC codes is fundamental to GST compliance. For healthcare providers, it plays a vital role in several key areas of financial administration. Neglecting this aspect can lead to incorrect tax filings, scrutiny from tax authorities, and potential financial penalties.

Here’s why SAC codes are so important:

Issuing GST-Compliant Invoices: It is mandatory to mention the correct SAC code on all invoices issued to patients or clients.
Filing Accurate GST Returns: When filing your GSTR-1 (details of outward supplies) and GSTR-3B (summary return), the services you’ve provided must be reported under the appropriate SAC code. This ensures your declared revenue aligns with the services rendered.
Determining the Correct GST Rate: The SAC code is directly linked to the applicable GST rate. While many healthcare services are exempt, some are taxable. The code helps determine whether a service is exempt or falls under a specific tax slab (e.g., 5%, 18%).
Claiming Input Tax Credit (ITC): For taxable services, correctly classifying your output services helps in the proper claiming of Input Tax Credit on your inputs (goods and services used to provide your final service), where applicable.

The Primary SAC Code for Hospitals and Medical Services

Navigating the extensive list of SAC codes can be daunting, but for the healthcare sector, the majority of services fall under a single, well-defined chapter. This simplifies the process for hospitals, clinics, and medical practitioners, ensuring that core medical services are classified correctly and consistently. Understanding this primary chapter is the key to mastering the SAC code classification for hospitals.

Chapter Heading 9993: Human Health and Social Care Services

Almost every service offered by a hospital, clinic, or medical professional is classified under Chapter 9993. This chapter serves as the umbrella category for all healthcare SAC code India classifications. Whether you are running a multi-specialty hospital, a local clinic, or a specialized diagnostic center, your search for the correct code begins here. This chapter is designed to cover a wide spectrum of health-related activities, from complex surgical procedures to routine consultations, making it the central point of reference for the entire medical industry.

SAC 999311: In-patient Services

The primary SAC code for hospitals that provide accommodation, meals, and medical supervision for patients is 999311. This code is specifically designated for “In-patient services.” It is the most relevant code for hospitals that admit patients for treatment, surgery, or observation.

The scope of SAC 999311 is comprehensive and includes:

Hospital room and board services.
Medical, surgical, and nursing care provided during the hospital stay.
Diagnostic and therapeutic services administered to in-patients.
Medicines and consumables provided as part of the in-patient treatment.

Essentially, any service that is part of the consolidated care package for an admitted patient falls under this classification.

GST Exemption on Core Hospital Services

A crucial point for healthcare administrators to note is that most core health services are exempt from GST. As per Notification No. 12/2017-Central Tax (Rate), “services by way of health care services by a clinical establishment, an authorised medical practitioner or para-medics” are exempt from tax. Since services under SAC 999311 are provided by a “clinical establishment,” they are generally exempt from GST.

A “clinical establishment” is defined as a hospital, nursing home, clinic, sanatorium, or any other institution that offers services or facilities requiring diagnosis or treatment of illness.

Actionable Tip: Tax laws are subject to change. It is always advisable to refer to the latest circulars and notifications on the Central Board of Indirect Taxes and Customs (CBIC) website to stay updated on the latest GST rates and exemptions.

Finding the Right SAC Code for Diagnostic Labs and Health Checkups

While hospitals handle a broad range of services, specialized facilities like diagnostic laboratories and health checkup centers have their own specific SAC codes under the same parent chapter (9993). Using the precise code is crucial for these businesses to accurately represent the nature of their services and ensure they are aligned with GST regulations, especially concerning exemptions.

The Correct SAC Code for Diagnostic Labs: 999312

The designated medical services SAC code for diagnostic centers and laboratories is 999312, which covers “Medical and Dental Practice Services.” This code is intended for services that are diagnostic in nature rather than requiring in-patient admission. If your business primarily focuses on conducting tests to identify diseases or medical conditions, this is the correct code to use on your invoices and in your GST filings.

Services typically covered under the SAC code for diagnostic labs (999312) include:

Pathology services (blood tests, urine tests, tissue analysis).
Radiology and imaging services (X-rays, CT scans, MRIs, Ultrasounds).
Cardiology tests (ECG, ECHO).
Other specialized diagnostic procedures.

Just like in-patient hospital services, these diagnostic services are also exempt from GST when they are part of a treatment or diagnostic process recommended by a medical practitioner and provided by a clinical establishment.

Identifying the SAC Code for Health Checkup Services: 999319

Preventive healthcare is a growing segment, and many centers offer comprehensive health checkup packages. The most appropriate SAC code for health checkup services is often 999319, which is a residual category for “Other human health services not elsewhere classified.” This code is used for services that don’t neatly fit into the in-patient (999311) or specific diagnostic practice (999312) categories.

However, there are important GST nuances to consider here:

Exempt Checkups: If a health checkup is conducted as part of diagnosing a specific illness or as a follow-up to treatment, it is considered a healthcare service and is exempt from GST.
Taxable Wellness Packages: If a health checkup is offered as a standalone wellness or fitness package, not directly linked to the diagnosis or treatment of an ailment, tax authorities may argue that it is not a core “health care service” and could be subject to GST. Similarly, consultations for purely cosmetic purposes are generally taxable. This distinction is critical for providers offering a mix of diagnostic and wellness services.

GST Applicability: When Are Healthcare Services Taxable?

While the guiding principle is that core healthcare services are exempt from GST, this exemption is not absolute. Certain goods and services provided by hospitals and clinics fall outside the scope of this exemption and are subject to GST. Understanding these exceptions is crucial for accurate billing and tax compliance, as incorrect application can lead to financial liabilities.

Understanding the Scope of GST Exemptions

To reiterate, the broad GST exemption applies to “health care services” provided by a clinical establishment, an authorized medical practitioner, or paramedics. This includes diagnosis, treatment, and care for illness, injury, deformity, or pregnancy. This covers consultations, surgeries, in-patient care, and related diagnostic tests. The primary goal of this exemption is to keep essential healthcare affordable and accessible.

Common Scenarios Where GST is Charged

Despite the broad exemptions, healthcare providers must charge GST in several specific situations. These are often ancillary services or goods that are not considered part of the core composite supply of healthcare.

Medicines and Consumables:
- For In-patients: When medicines, implants, or other consumables are supplied to an admitted patient as part of their treatment, it is considered a composite supply of healthcare and is exempt from GST.
- For Out-patients: When a hospital pharmacy sells medicines to out-patients or the general public (not as part of an in-patient admission), it is treated as a regular supply of goods. These sales are taxable under their respective HSN codes at the applicable GST rates.
Hospital Room Rent:
- As per a recent amendment, GST is applicable on hospital room rent. If the room charge per day per patient exceeds ₹5,000, the amount is taxable at a rate of 5% GST, but without the benefit of Input Tax Credit.
- This GST is not applicable to ICU, ICCU, NICU, or CCU rooms, which remain exempt regardless of the charge.
Cosmetic Procedures:
- Healthcare services provided for purely aesthetic reasons are taxable. Procedures like plastic surgery, hair transplants, or botox treatments that are not undertaken to restore anatomy or functions of the body affected due to congenital defects, injury, or trauma are subject to 18% GST.
Food and Beverages:
- Food supplied to admitted patients as part of their diet prescribed by the doctor or nutritionist is included in the composite supply of healthcare and is exempt.
- However, food supplied to visitors, attendants, or even doctors in the hospital’s food court or canteen is taxable as a regular restaurant service.

Conclusion

Mastering GST compliance is an indispensable part of running a successful healthcare facility in India. At the heart of this compliance lies the correct identification and application of SAC codes. From understanding the primary SAC code for hospitals (999311 for in-patient services) to knowing the specific codes for diagnostic labs (999312) and health checkups (999319), accuracy is key. More importantly, recognizing the fine line between GST-exempt core medical services and taxable ancillary supplies like high-value room rent and outpatient medicines is critical for flawless financial management.

Understanding the correct SAC code classification for hospitals is the foundational step toward achieving robust tax compliance. This allows healthcare providers to avoid legal complications and focus their energy on providing exceptional patient care. Navigating the complexities of GST, from registration and filing to advisory on specific transactions, can be challenging. If you need expert assistance to ensure your healthcare business stays compliant and efficient, contact TaxRobo today. Our team of specialists is here to handle your tax worries, so you can concentrate on healing.

Frequently Asked Questions about Healthcare SAC Codes

Q: What is the main SAC code for hospital room charges?

A: Hospital room charges for in-patients fall under the broader category of “In-patient services,” which is classified under SAC 999311. However, it’s important to remember the specific tax rule: as per current GST regulations, hospital room rent (excluding ICU) is taxable at a 5% rate if the charge per patient per day exceeds ₹5,000.

Q: Is there a separate SAC code for online doctor consultations (telemedicine)?

A: Telemedicine or online consultations are considered a form of medical practice. Therefore, they are typically classified under SAC 999312 (Medical and Dental Practice Services). As these services are provided by an authorized medical practitioner, they are exempt from GST, in line with the exemption for other healthcare services.

Q: Where can I find the official and complete list of SAC codes?

A: The most reliable and up-to-date source for the complete list of SAC codes is the official GST portal or the Central Board of Indirect Taxes and Customs (CBIC) website. You can find the detailed classification scheme on the GST Council’s services classification page.

Q: What is the difference between HSN and SAC codes?

A: The primary difference between HSN and SAC codes is what they classify. HSN (Harmonized System of Nomenclature) is an internationally recognized system used to classify goods. SAC (Services Accounting Code) is a system developed in India to classify services. Healthcare facilities like hospitals and clinics use both:

SAC codes for services rendered (e.g., consultations, surgery, room rent).
HSN codes for goods sold (e.g., medicines from the pharmacy to out-patients, medical equipment).

SAC Code for Hospitals: What You Need to Know!