GST on therapy and counselling in India

The short answer

Therapy that is genuinely the diagnosis, treatment or care of a mental illness is exempt from GST in India under Entry 74 of Notification 12/2017-Central Tax (Rate), if it is delivered by an authorised medical practitioner, by para-medics, or at a clinical establishment. A psychiatrist clearly qualifies. An RCI-registered clinical psychologist very probably qualifies. For a counselling psychologist with a masters degree and no statutory registration, which describes a large share of practitioners in India, the law does not give a clean answer, and anyone who tells you otherwise is guessing.

The trap that catches more practices than the exemption question itself: exempt turnover still counts toward the twenty lakh rupee registration threshold, and the shelter for wholly-exempt suppliers only holds while your income is exclusively exempt. One supervision invoice or one paid workshop can pull an entire exempt practice into the registration net.

Where the exemption comes from

One entry does all the work. Everything else on this page is an argument about whether a given practitioner fits inside it.

74. Heading 9993. Services by way of -

(a) health care services by a clinical establishment, an authorised medical practitioner or para-medics;

(b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above.

Rate: Nil. Condition: Nil.

Entry 74, Notification No. 12/2017-Central Tax (Rate), 28 June 2017

The notification defines what counts as health care, and the definition is broad in one direction and narrow in another. It covers care as well as treatment, which plainly reaches psychotherapy. But it confines that care to a recognised system of medicine, and that is the phrase everything turns on.

“health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma;

Paragraph 2(zg) of the same notification

The phrase the whole question turns on

“Recognised system of medicines” is not defined in the GST notification. When the Gujarat Appellate Authority for Advance Ruling had to fill that gap, it imported the definition from the Clinical Establishments Act 2010:

“recognised system of medicine” means Allopathy, Yoga, Naturopathy, Ayurveda, Homoeopathy, Siddha and Unani System of medicines or any other system of medicine as may be recognised by the Central Government;

Clinical Establishments (Registration and Regulation) Act 2010, s. 2(h), as applied in Oswal Industries Ltd (Nimba Nature Cure Village), GUJ/GAAAR/APPEAL/03/2022

Psychology is not on that list. It is not a system of medicine. So the real question is not “is therapy healthcare”, which it obviously is in ordinary language, but whether psychological treatment of a diagnosed mental illness counts as care delivered within allopathy. No Indian tax authority has ever answered that.

There is a second difficulty. Entry 74 also covers “para-medics”, which is the limb most non-medical mental health practitioners actually rely on. That word is not defined anywhere in the notification either. The definition commonly quoted online comes from a departmental guidance document published under the old service tax regime, not from GST law. It may well be persuasive. It is not binding.

Where each kind of practitioner stands

Why the setting does not decide it

Entry 74 has three limbs joined by “or”. You qualify on your own footing, or the establishment qualifies, or both. So working from home, from a rented room or inside a hospital does not by itself change the answer. The CBIC has confirmed the hospital case directly:

Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not, are healthcare services which are exempt.

CBIC Circular No. 32/06/2018-GST, 12 February 2018, S.No. 5

A solo practice can textually be a clinical establishment: the definition covers a “clinic” and “any other institution by, whatever name called”, and the GST notification imposes no requirement that you be registered under the Clinical Establishments Act. But the Gujarat AAAR case is a warning about how that argument fails in practice. A naturopathy retreat was denied the exemption not because naturopathy was unrecognised, but because the substance of what it sold was accommodation: minimum seven-day stay packages, room rate as the dominant charge, no outpatient department, no clinical discharge criteria.

The lesson is usable. A practice that assesses, formulates, keeps a clinical record and ends treatment on clinical grounds looks like the opposite of that retreat. That is the shape of a defensible position.

The rule that decides close calls, and it is not in your favour

If you take one thing from this page, take this. The Supreme Court has held that ambiguity in an exemption is resolved against the taxpayer, which is the reverse of the rule for charging provisions.

in case of ambiguity in a charging provision, the benefit must necessarily go in favour of subject/assessee, but the same is not true for an exemption notification wherein the benefit of ambiguity must be strictly interpreted in favour of the Revenue/State.

A person claiming exemption, therefore, has to establish that his case squarely falls within the exemption notification, and while doing so, a notification should be construed against the subject in case of ambiguity.

Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, 2018, Supreme Court, Constitution Bench

The burden is on you to show you fit. “Nobody has said we do not qualify” is not a position.

What the exemption does not reach

This matters more than the exemption itself for most practices, because it is where an otherwise-exempt therapist acquires taxable income without noticing.

The registration trap

This is the part practitioners get wrong most often, and it has nothing to do with whether therapy is exempt.

Exempt turnover counts.“Aggregate turnover” under s. 2(6) of the CGST Act expressly includes exempt supplies. A therapist billing twenty-five lakh rupees of wholly exempt therapy has an aggregate turnover of twenty-five lakh rupees, not zero.

What actually protects a wholly-exempt therapist is a different provision, s. 23(1)(a), which relieves a person engaged exclusively in supplying exempt services from having to register at all, whatever the turnover.

The word “exclusively” is the entire trap. The moment there is one taxable rupee, that shelter is gone, and your whole aggregate turnover, exempt therapy fees included, is tested against the threshold. Worked through:

Twenty-two lakh rupees of exempt therapy fees, plus sixty thousand rupees of supervision fees, is an aggregate turnover of twenty-two lakh sixty thousand. The threshold is crossed and registration is required.

GST is then charged on the sixty thousand only. The therapy stays exempt. But the practice now files returns, issues bills of supply for therapy and tax invoices for supervision, and apportions input credit.

The services threshold is twenty lakh rupees for most of India, and ten lakh for certain special category states. The forty lakh figure you may have seen applies only to businesses dealing exclusively in goods and is never available to a therapist.

One more route worth knowing about: if you buy a service from outside India that involves a real person rather than automated software, for example clinical supervision from a supervisor abroad delivered live over video, reverse charge can apply to you as the Indian recipient, and that can compel registration independently of your turnover. Automated software subscriptions bought from abroad generally do not have this effect, because the foreign supplier accounts for the tax instead.

Clients in another state, and clients abroad

For an online session with an unregistered client, the place of supply is the client’s location where you have their address on record, which any clinical practice does. So a therapist in Maharashtra seeing a client in Karnataka is making an inter-state supply. For a wholly-exempt therapist this does not force registration, because the provision that compels it is confined to inter-state taxable supply. Once you are registered for any reason, though, you must record place of supply per client and report it state-wise. You do not need a registration in each state; one, in your own state, with correct tagging.

For a client abroad, there is a distinction worth getting right. Online therapy for a client outside India can be an export of services, which is zero-rated. In-person therapy in India for a visitor from abroad is not an export, because the place of supply for a service requiring the recipient’s physical presence is where it is performed.

Where practices actually fail the export test is the payment condition: it must be received in convertible foreign exchange, or in rupees where the RBI permits. An NRI client paying you from an Indian bank account or over a domestic UPI rail breaks the chain even though they are sitting in Dubai.

The cost nobody mentions

If your therapy income is exempt, the GST you pay on your own costs is not refundable and not creditable. It is a permanent expense, and you should price for it.

Input credit is restricted to the portion attributable to taxable supplies. For a wholly exempt practice that portion is nil. So the tax on your clinic rent, your practice-management software, your video platform, your accountant, the supervision you receive and the platform fees you pay is simply a cost. A practice absorbing thirty thousand rupees a month of GST-bearing inputs is carrying roughly sixty five thousand rupees a year of sunk tax.

The mirror image is worth saying too, because exemption is not always the better commercial outcome: a practice whose income is mostly corporate and supervisory, already registered and charging tax, recovers all of that. You do not get to choose which side you are on. It follows from the law.

The same trap has a sharper version once a practice has associates, because the direction a revenue split flows decides who is treated as supplying whom, and therefore which side eats the unrecoverable tax. We work through that, with the CBIC circular it turns on, in paying associate therapists in India.

What is genuinely unresolved

Stated plainly, because the honest version of this page is more useful than a confident one.

• No Indian tax authority has ever decided GST on independent psychotherapy or counselling. No advance ruling, no appellate ruling, no High Court decision, no circular. The nearest ruling decides only that training is taxable.
• “Recognised system of medicines” is undefined in GST law and was filled from a statute whose list does not include psychology. This is the chokepoint.
• “Para-medics” is undefined too, and it is the limb most non-medical practitioners depend on. It rests on the softest foundation in the whole analysis.
• RCI registration cuts both ways, and reasonable chartered accountants disagree about whether it gets a clinical psychologist through the door.
• The unregistered counselling psychologist is the true hard case, and also the most common practitioner in India. Any confident answer in either direction is not an honest one.
• Whether a wholly-exempt therapist with a reverse-charge liability must register is open on the face of the statute, and practitioners split on it.

What to take to your accountant

This page cannot tell you your position, and a page that offered to would be doing something it is not entitled to do. These are the questions that actually determine the answer:

• Am I registered with the RCI, or with any statutory council?
• Do I have any non-therapy income at all, including a single workshop, a supervision fee, or a course sale?
• What is my total billing for the year, counting exempt therapy fees?
• Do I supervise other professionals for a fee?
• Do I have corporate or EAP contracts, and how exactly are they worded and invoiced?
• Do I see clients outside India, and how does their money reach me?
• Do I buy any service from a real person based outside India?

Sources

Everything above is sourced. Primary sources are the law itself and should be preferred over any summary, including this one.

• Primary: Notification No. 12/2017-Central Tax (Rate), 28 June 2017 (Entry 74 and the paragraph 2 definitions)
• Primary: CBIC Circular No. 32/06/2018-GST, 12 February 2018
• Primary: Gujarat AAAR, Oswal Industries Ltd (Nimba Nature Cure Village), GUJ/GAAAR/APPEAL/03/2022
• Primary: Finance Act 2023 (amendment to s. 23 of the CGST Act)
• Primary: CGST Rule 46, tax invoice particulars

About this guide

We wrote this because no therapist-facing account of GST on psychotherapy and counselling existed in India, and the only substantive discussion sat in accountants’ forums. Everything here is sourced to the notification, section, circular or ruling it comes from, and we have said clearly where the law gives no answer.

We are not chartered accountants, tax practitioners or lawyers, and we are not authorised to advise on Indian tax. We have not reviewed your practice and we do not know your facts. This is general information about the state of the law as at 1 September 2026. It is not an opinion, not a recommendation, and not a substitute for advice from a qualified professional who has looked at your situation. Tax law changes and rulings can be overturned. If you act on anything here without taking advice, you do so entirely at your own risk.

Some specifics were deliberately left out rather than stated approximately, including service accounting codes at the six-digit level, because a number on a page like this ends up on a real invoice. Your accountant should confirm those against the current classification.

If you spot an error, write to us at collective@therapistandco.com and we will correct it and date the correction.

All guides · Paying associate therapists in India · Clinical supervision in India · Going from a solo practice to a group