GST for hospitals: when to issue a Tax Invoice vs a Bill of Supply
Hospitals must switch between Tax Invoice and Bill of Supply per CGST Rule 49. Get it wrong and you face demand notices. Here's how it works.
Hospital billing under GST is not straightforward because healthcare is partially exempt. Room charges above ₹5,000/day are taxable. Lab tests, pharmacy and consultation may be exempt or taxable depending on the service structure. The hospital must issue the correct document — Tax Invoice for taxable supplies (CGST Sec 31), Bill of Supply for exempt supplies (CGST Sec 31(3)(c)).
CGST Rule 49 defines the contents of a Bill of Supply. It must not show tax amounts. A Tax Invoice must show GSTIN, HSN/SAC codes and tax breakup.
The common error: hospitals issue a Tax Invoice for everything, including exempt services, showing 0% tax. This is technically incorrect — exempt services require a Bill of Supply, not a zero-rated Tax Invoice. The distinction matters during audit.
The dangerous error: using someone else's GSTIN on a patient bill. Under CGST Sec 122, issuing an invoice with an incorrect GSTIN attracts a penalty of ₹10,000 or the tax amount, whichever is higher. Under CGST Sec 132, knowingly issuing a false invoice is a criminal offence.
OneCity handles this by reading the hospital's GSTIN from its own tenant record. If the GSTIN field is blank, no GSTIN line prints. The system evaluates each line item's taxability and switches the document header between Tax Invoice and Bill of Supply automatically per Rule 49. Mixed bills (some taxable, some exempt) are issued as Tax Invoices with exempt lines at nil.
E-invoice (IRN) applies to hospitals above the turnover threshold. OneCity generates the IRN payload to NIC specification and stores it. Live posting to NIC IRP enables after the hospital completes GSP onboarding — the payload is ready, the pipe is not connected until you connect it.
