The Sindh Revenue Board (SRB) has implemented a new sales tax policy for hospitals in the province, effective July 1, 2024. This article explores the key details and implications of this change.
New Tax on Hospital Rooms and Beds:
- A 3% sales tax now applies to rooms and bed services by hospital.
- This tax is only applicable for charges exceeding Rs. 25,000 per day, including any fixed charges.
- All other hospital services remain exempt from Sindh Sales Tax (SST) under a separate notification.
Rationale Behind the Change:
- The Sindh Budget 2024-25 categorized specific hospital services as taxable.
- This policy aims to streamline tax regulations within the healthcare sector.
- The reduced tax rate (3%) balances fiscal needs with supporting healthcare infrastructure.
Compliance Requirements:
- Hospitals and clinics providing taxable services must comply with the Sindh Sales Tax on Services Act, 2011, and its amended rules.
- These rules outline procedures for e-registration, invoicing, tax collection, and deposits.
- Hospitals act as “collection agents” for sales tax on services provided by medical practitioners within their facilities.
Impact and Next Steps:
- This change aims to improve tax compliance within the healthcare sector.
- Hospitals and clinics are urged to familiarize themselves with the amended rules and ensure adherence.
- Stakeholders should monitor further developments and clarifications from the SRB.
Overall, the SRB’s policy introduces a new tax on high-cost hospital rooms and beds in Sindh. While aiming to enhance tax compliance, it balances the burden with a reduced tax rate. Hospitals and clinics should adapt their processes to comply with the new regulations.
