SRB Introduces 3% Sales Tax for Hospital Rooms and Beds

SRB Introduces 3% Sales Tax for Hospital Rooms and Beds

Karachi, July 3, 2024 – The Sindh Revenue Board (SRB) has implemented a reduced rate of 3% sales tax on services provided by hospitals for rooms and beds, effective from July 1, 2024.

This decision, outlined in a recent circular issued by the SRB, aims to streamline tax regulations related to healthcare services under the Sindh Sales Tax on Services Act, 2011.

According to the circular, the Sindh Budget 2024-25 introduced budgetary measures that classify services provided or rendered by hospitals and clinics as taxable services. Initially, all services offered by hospitals and clinics were exempt from Sindh sales tax (SST), as per a notification issued on July 29, 2024. However, services related to the provision of rooms and beds for indoor and day-care patients are now subject to a reduced sales tax rate of 3%. This applies specifically when the charges for such rooms and beds exceed Rs 25,000 per day, inclusive of any fixed charges.

The SRB emphasized that the procedures for the collection and payment of sales tax on these services are specified in Rule 42K of the Sindh Sales Tax on Services Rules, 2011, as amended by a notification dated June 29, 2024. This rule outlines the requirements for e-registration, invoicing, charging, collecting, and depositing the sales tax amounts by hospitals and clinics. Additionally, it mandates hospitals and clinics to act as ‘collection agents’ for services provided by medical practitioners and consultants within their premises.

Hospitals and clinics offering taxable services subject to the 3% sales tax rate are advised to strictly adhere to the provisions of the Act, 2011, and the rules prescribed therein. Compliance with these regulations is essential to ensure smooth implementation and adherence to tax obligations.

This regulatory adjustment by the SRB reflects efforts to enhance tax compliance within the healthcare sector while ensuring equitable treatment across different service categories. The introduction of a reduced sales tax rate on specific healthcare services aims to balance fiscal responsibility with the need to support essential healthcare infrastructure.

As hospitals and clinics navigate these new tax requirements, stakeholders are encouraged to familiarize themselves with the amended rules and comply diligently. The SRB continues to monitor and refine tax policies to support economic growth while maintaining transparency and accountability in tax administration.