Is service tax on TCM services a new policy or existing since 2018?

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Service Tax on Traditional Chinese Medicine Services Has Been Applicable Since 2018

The imposition of service tax on traditional Chinese medicine (TCM) services is not a new policy introduced by the current administration; rather, it has been in effect since 2018. This classification and the associated tax were established within the service tax guidelines issued in that year, predating the current unity government. The policy was maintained through successive tax regimes, including the Goods and Services Tax (GST) and the subsequent Sales and Service Tax (SST) system.
Classification Under Taxable Services

Under the existing service tax framework, TCM is categorised alongside traditional Malay medicine and traditional Indian medicine within a taxable service bracket. This grouping is distinct from modern medicine, which falls under a separate classification. The service tax is levied on the professional services rendered by TCM practitioners, not on the medicinal products themselves.
Application on Service Charges

The service tax is specifically applied to the charges for the consultation and treatment services provided by TCM practitioners. For instance, if a patient incurs a RM100 fee for treatment and RM150 for medication, the service tax would only be calculated on the RM100 service charge. This distinction ensures that the cost of the medicine is not subject to the service tax.
Historical Application and Future Adjustments

The Customs Department has previously communicated this requirement to TCM practitioners, with letters requesting the payment of service tax dating back to 2018, coinciding with the reintroduction of the SST. The current service tax rate stands at 6 per cent, with a planned increase to 8 per cent effective March 1, 2024. The Deputy Finance Minister has indicated an intention to engage with industry stakeholders to address concerns and clarify the tax collection mechanisms.

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Is service tax on TCM services a new policy or existing since 2018?

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