By Aarogentix · · 8 min read
Tax treatment depends on the service, the patient and the current law, and it changes. This guide is about what to record, not which rate applies. Confirm rates and exemptions with your chartered accountant.
A hospital sells many different things on one day: consultations, procedures, bed-days, medicines, lab and imaging tests. Each can be treated differently for tax. If the bill does not record clearly what was sold, your accountant has to guess, and guesses show up in an audit. These are the records worth getting right.
1. A bill number that never repeats
- One continuous series per financial year, with no gaps and no duplicates
- Separate series for OPD, IPD and pharmacy if you keep them separate, each clearly labelled
- No editing of a printed bill: a correction is a credit note or a new bill that refers to the old one
2. Who, when and what
- Patient name, patient ID (UHID) and phone number
- Date and time of the bill and the date of service
- The doctor or department that provided the service
- For admissions: admission number, ward and bed, and the dates of stay
3. Itemise every charge
A single “hospital charges” line is hard to defend. List each service with its description, quantity, rate and amount. Keep the HSN or SAC code against each line so that taxable and non-taxable items can be separated at filing time.
- Consultation, procedure, room, nursing and visit charges as separate lines
- Medicines and consumables with quantity actually issued, not quantity prescribed
- Lab and imaging tests at the price-list rate
- Package charges shown as a package, with what it includes
4. Discounts, concessions and write-offs need a reason
Every discount should record who allowed it, how much and why, for example staff, charity or negotiated rate. A bill that quietly drops in value is the first thing an owner or auditor questions. Keep a rule for who may give how much, and review the totals monthly.
5. Advances, part payments and settlements
- Record each deposit as received money against the patient, with its own receipt
- Show the advance applied on the final bill, and what is still to be refunded or collected
- Part payments recorded one by one with date, mode and reference, so the balance is always exact
- Cash, card, UPI and bank transfers kept apart for the day-end closing
6. Refunds and credit notes
A refund is a separate entry that points to the original bill, with an amount, a reason and the person who approved it. Never refund more than was received, and never delete the original. If your software lets you overwrite a bill, ask how an auditor would see what changed.
7. Pharmacy bills are different
- Batch number and expiry date for each medicine sold
- MRP and the price charged, with the tax shown the way your accountant needs it
- Stock reduced by what was sold and restored only by a recorded return
- Doctor and patient details where the medicine requires a prescription
8. Insurance, TPA and corporate bills
Keep the patient’s share and the payer’s share visible, along with the claim or pre-authorisation reference, the amount approved and the amount finally settled. When the payer pays less than billed, record the difference as a deduction with a reason instead of changing the bill.
9. Close the day properly
- Total what each cashier collected, by payment mode, from the system, not from memory.
- Count the drawer and write down any difference with the reason.
- Have a second person approve the closing.
- Lock the day so entries cannot be changed quietly the next morning.
10. Keep it, and be able to find it
Keep bills, receipts, credit notes and closing sheets for as long as your accountant and legal adviser tell you. Make sure you can find a single patient’s bills quickly, and that a copy of any bill can be reprinted and shows it is a copy. See how hospital billing software handles these records, or read our buying checklist.
Want to test these on real bills? Talk to us and we will show you billing on real bills.