By CA Surekha S Ahuja
Introduction: The GST Challenge in Veterinary Ecosystems
Veterinary service providers today operate in a hybrid ecosystem that includes medical healthcare, grooming, wellness, lodging, training, physiotherapy, behavioural services, retail of pet goods, sale of live animals, and ancillary services. GST classification disputes frequently arise because the legislation provides a blanket exemption only to healthcare, leaving all non-medical activities squarely taxable.
The purpose of this guidance note is to provide a complete, authoritative, and defensible GST framework covering classification, SAC coding, tax rates, boundary identification, documentation, invoicing design, ITC optimisation, and audit risk management. This advisory consolidates the entire legal, practical, and technical landscape applicable in 2025–26.
Statutory Foundation: Healthcare Exemption for Veterinary Services
Under Entry 46 of Notification No. 12/2017 – Central Tax (Rate), “services by a veterinary clinic in relation to health care of animals or birds” are fully exempt from GST.
This exemption is broad but strictly limited to diagnosis, treatment, preventive medical procedures, surgical care, inpatient care, and post-operative services, including any intervention rooted in therapeutic intent.
To fall under the exemption, the service must satisfy three elements:
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Clinical Assessment – The service should originate from or be supported by a veterinary assessment or documented clinical need.
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Diagnostic or Therapeutic Purpose – The objective must relate to medical restoration, healing, recovery, or disease prevention.
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Veterinarian-Led Delivery – The intervention must be either performed or directed by a qualified veterinary professional.
This legal foundation forms the guiding lens for classification throughout this note.
Comprehensive SAC and Taxability Classification
A. Exempt Veterinary Healthcare Services (SAC 9993 Series)
These services fall unequivocally under the exemption when adequately supported by clinical documentation.
| Service Type | SAC | GST Rate | Key Requirements |
|---|---|---|---|
| Clinical consultation, physical examination | 999311 | Exempt | Clinical findings recorded |
| Diagnostic services (laboratory, imaging, pathology, ultrasound) | 999312 | Exempt | Diagnostic order and report |
| Surgeries including implants and anaesthesia | 999313 | Exempt | Operative notes and implant specifications |
| Hospitalisation and inpatient care | 999321 | Exempt | Admission/discharge notes |
| Post-operative treatment and medical physiotherapy | 999391 | Exempt | Treatment schedule and vet prescription |
| Emergency and critical care | 999399 | Exempt | Emergency assessment |
Boundary logic: The presence of clinical documentation is the decisive element.
B. Grooming and Cosmetic Services (SAC 998612 at 18%)
Cosmetic grooming, aesthetic procedures, routine ear cleaning, bathing, hair trimming, styling, and de-shedding are fully taxable.
Tax shift rule:
If the grooming is medically indicated (parasite removal, wound dressing, dermatitis care), supported by vet notes, the service moves to SAC 999312 (Exempt).
C. Boarding, Lodging, and Day-care (SAC 996311 at 18%)
Boarding and lodging services are taxable when they are custodial, hospitality-based, or comfort-oriented.
However, medical boarding—i.e., boarding required post-surgery, during recovery, or as part of a treatment plan—falls under SAC 9993, and is exempt.
D. Behavioural Training, Obedience Schooling, Fitness and Agility Coaching (SAC 999799 at 18%)
These services are fully taxable unless they form part of a prescribed medical rehabilitation plan, in which case the service shifts to 999391 (Exempt).
E. Retail Sale of Goods (HSN-Based Taxability)
Where a veterinary business operates a retail counter or online store, the classification shifts to HSN-based taxation.
| Goods Category | HSN | GST Rate |
|---|---|---|
| Pet food including wet, dry, treats | 2309 | 18% |
| Veterinary medicines | 3003/3004 | 5% or 12% |
| Pet accessories (collars, harnesses, beds, leashes, cages, toys, grooming equipment) | 4201/4202/Other relevant HSN | 18% |
| Nutraceuticals and supplements | Relevant HSN | 12% or 18% |
F. Sale of Live Animals
| Type | HSN | Indicative Rate | Notes |
|---|---|---|---|
| Livestock (bovine, ovine, caprine, equine, poultry, fish) | 0101–0106 | Exempt or 5% | Species-specific |
| Pets (dogs, cats, ornamental fish, exotic pets) | 0106 | Typically 18% | Depends on species, breeding nature, notifications |
| Commercial pet store sales | 0106 | Usually 18% | Treated as supply of goods |
The seller must ensure classification accuracy as misclassification of exotic animals attracts heightened scrutiny.
Classification Framework: Medical vs. Non-Medical Determination
Core Analytical Test: Clinical Documentation Test
A service is exempt only when clinical records support diagnostic or therapeutic intent. In the absence of documentation, the transaction defaults to taxable.
Additional Boundary Tests
• Purpose Test – Is the service medically required or cosmetic?
• Skill Requirement Test – Can a non-veterinarian perform it?
• Outcome Test – Does it restore health or improve appearance?
• Bundling Test – Is it naturally bundled with medical care?
This multi-layered test ensures defensible classification during audits.
Billing Structure: The Five-Invoice Model for Clean Segregation
To avoid composite supply disputes and maintain audit clarity, the following model is recommended:
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Healthcare Invoice – Exempt; SAC 9993 series
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Grooming Invoice – Taxable; SAC 998612
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Training Invoice – Taxable; SAC 999799
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Boarding Invoice – Taxable; SAC 996311 (unless medical)
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Retail Invoice – Goods; relevant HSN
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Sale of Live Animals – Goods; HSN 0106 series
Segregation ensures correct GSTR-1 mapping and prevents misclassification.
ITC Treatment for Mixed Operations
Where a veterinary business supplies both exempt (healthcare) and taxable (grooming, retail, boarding, training) services, ITC must be apportioned under Rules 42 and 43.
A. Monthly Rule 42 Formula
Eligible ITC = Total common ITC × (Taxable turnover ÷ Total turnover)
Example:
• Total revenue: ₹5,00,000
• Taxable revenue: 40 percent
• Eligible proportion of common ITC: 40 percent
• Remaining ITC reversed in GSTR-3B under Table 4(B)(2)
B. Capital Goods (Rule 43)
Capital goods used in both divisions (e.g., ultrasound machine, X-ray equipment) require proportional ITC reversal over 60 months.
Documentation and Compliance Requirements
For exempt healthcare services
• Examination notes
• Diagnostic orders and results
• Surgical and anesthesia records
• Discharge summaries
• Treatment plans
• Evidence of medical necessity for physiotherapy or boarding
For taxable services
• Detailed grooming and boarding registers
• Training logs
• Material consumption registers
• SAC mapping registers
• Clear separation between staff performing medical vs non-medical tasks
Return and Reconciliation Requirements
• Monthly reconciliation between GSTR-1, GSTR-3B, books, and e-invoices
• Turnover bifurcation ledger
• Exempt and taxable summary sheets
• Annual return mapping
Recommended Business Organisation Model
A two-division model offers the highest compliance efficiency.
Division A: Veterinary Healthcare (Exempt)
Purely therapeutic operations. No ITC claim.
Division B: Wellness, Grooming, Training, Boarding, Retail (Taxable)
Attracts 18 percent GST and offers full ITC credit.
Benefits:
• Zero risk of exemption disputes
• Optimised ITC
• Simplified accounting
• Clear business segmentation
• Strong audit defensibility
Quick Reference Summary Table
| Category | SAC/HSN | GST Rate | Classification Principle |
|---|---|---|---|
| Veterinary healthcare | 9993 series | Exempt | Clinical documentation required |
| Grooming | 998612 | 18% | Cosmetic unless medically prescribed |
| Boarding | 996311 | 18% | Medical boarding exempt |
| Training | 999799 | 18% | Rehabilitation therapy exempt |
| Retail | Relevant HSN | 5–18% | Goods classification |
| Live animals | 0101–0106 | Exempt–18% | Species-specific |
Conclusion
The veterinary sector sits at the intersection of exempt healthcare and taxable wellness services, making accurate GST classification essential for risk mitigation, pricing strategy, and operational efficiency. This guidance note provides a complete framework that integrates statutory interpretation, SAC classification, ITC rules, practical billing methodology, and documentation discipline into a single, comprehensive compliance model.
Veterinary service providers that implement the layered classification tests, maintain disciplined documentation, and adopt the five-invoice structure can operate with confidence, reduced audit exposure, and optimal tax efficiency.
