Taxation and Care: Understanding GST for Senior Citizen Services and Old Age Homes

Old age houses and senior citizen services are very important to our society because they care for, socialize, and help our elderly. As our population ages, there are many more people who need these services. But when it comes to senior services, both the people who run assisted living centers and the people who use them need to know about taxes, especially the Goods and Services Tax (GST). This blog post is going to be about GST for senior citizens services & old age homes, including how it affects both the service companies and the seniors who use them.

History of GST on Old Age Homes and Services for Senior Citizens

The GST Council has considered our elderly citizens. At its 28th meeting in New Delhi on July 21, 2018, the GST Council resolved that old age homes should receive large tax savings under specific conditions. The Indian government issued Notification 14/2018-Central Tax (Rate) on July 26, 2018. Sl. No. 9D was added to Notification No.12 of 2017, Central Tax (Rate), dated June 28, 2017 (after Sl. 9C), exempting the below mentioned services:

• Services provided by a Central Government, State Government, or entity registered under section 12AA of the Income-Tax Act, 1961 (43 of 1961) to residents aged 60 or older for up to twenty-five thousand rupees per member per month, including lodging, boarding, and maintenance are exempt
• Section 12AA of the 1961 Income Tax Act governs trust and institution registration. It says a trust or organization is religious, charitable, or both. The section outlines the prerequisites for registering a trust or institution. The application must be made within two years after the financial year the property was bought, settled, or converted into a trust or organization
• Before this amendment, all aged care establishments were taxed under GST. The services were classified as “Services by a hotel, inn, guesthouse, club or camping, for residential or lodging purposes,” with a daily cost of ₹ 1000 or more. Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (Sl No. 7(ii) – Heading 9963) specified an 18% tax rate of 9% Central GST (CGST) and 9% State GST (SGST). Establishments like hostels, old age homes, working women hostels, hotels, clubs, and guest houses are GST-exempt if their lodging charges are below ₹1000.00 per day.
• The exemption for accommodation services provided by establishments like hotels, inns, guest houses, clubs, or campsites with a supply value of ₹1,000.00 or less per unit per day has been removed in Notification No. 04/2022-CT (Rate) dated: 13.07.2022. The above services will be taxed starting July 18, 2022. As per Notification No. 03/2022-CT (Rate) dated 13.07.2022, accommodation services priced at or below ₹7,500.00 per unit per day are subject to a 12% GST tax.

Current GST rates for old age homes and Services for Senior Citizens

• The old age home, operated by the Central Government, State Government, or an entity registered under section 12AA of the Income-tax Act, 1961 (43 of 1961), offers services to individuals aged 60 and above. These services are provided for a monthly fee of up to twenty-five thousand rupees per member, encompassing expenses related to accommodation, meals, and general upkeep. Also rebate is available to senior citizens in GST.
• If the value of the service provided by an old age home exceeds 7,500.00 per unit per day, then the service is taxable under the GST Acts at the rate of 18%. A reduced 12% tax rate applies to services having a supply value of 7,500 per unit per day or less. This information can be found in Sl No.7, Column (i) & (vi) of the original Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, as amended.
• Regular medical monitoring for seniors is 18% taxed. The West Bengal Authority for Advance Ruling (AAR) issued Order No. 18/WBAAR/2022-23 on 22.12.2022, determining that Snehador Social & Health Care Support LLP must pay an 18% GST for regular medical monitoring and logistical support to senior citizens at their homes. According to serial number 31 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, the entity does not match the exemption criteria and is subject to an 18% tax rate. This notification covers Heading 9993, human health, and social care services, as revised.
• Subscription-based elderly care is taxable at 18%. According to a recent report, the Maharashtra Authority for Advance Ruling (AAR) has determined that there is no exemption from the Goods and Services Tax (GST) for payments made towards elderly-care programs that necessitate a membership. These services are provided to elderly individuals who reside alone. The services encompass logistics support, in-home care, utility bill payment, vital errand running, social meetings, and medical check-ups.
• A detailed review of the shows that composite services are a viable solution. Multiple services are bundled here. Suppose one service is GST-exempt and the rest are GST-charged. The exemption can only be used for a service that is not a composite supply and meets all the requirements. The major supply must be taxable to tax a composite supply. In this case, AAR noted that older persons in the programs receive critical and social/entertainment services. so, the health care service exemption is not allowed.
• GST payment for senior citizen services will be done by the particular care taker places.

Takeaway

GST might make it harder to run senior services and retirement homes, but both seniors and care workers need to understand how complicated this tax system is. By knowing how GST affects these services, service providers can make smarter financial choices that lower costs and make it easier for senior citizen expenses to get care. As senior care changes, it’s important to understand GST and what it means. It’s smart to take this step to protect the health and dignity of our senior people.