Bajaj's comments came after hospital associations pressed for a rollback of the measure introduced after the 47th GST Council meeting last month.

Bajaj said industry concerns about the change were unfounded and that softwares would be able to handle the compliance addition. Hospitals say they are in a fix over implementing the tax as room rents are usually bundled into treatment packages that are difficult to unpack.

"I don't see any reason that there should be any such kind of messaging that 5% GST on a ₹5,000-plus non-ICU room is hitting at affordable healthcare. I don't see any understanding of that," Bajaj told a CII event on five years of GST.

"I would also like to know how many hospital rooms are there in this country and out of those, what percentage are charging more than ₹5,000, I think it will be minuscule. So if I can spend ₹5,000 on the room, I can perhaps spend ₹250 on the GST."

The tax collected on these rooms will be used for services such as free food for the poor, he said. Bajaj also said that zero-rating on healthcare was not feasible as, once implemented, demands for putting more sectors under the category, such as education, would emerge, putting more tax burden on existing items under GST.

"The more such kind of carve-outs we do, (the more) the burden on certain other items will go up. So, the better thing would be to spread the base and have lower rates."

Last month, the GST Council announced a host of rate changes among which were non-ICU hospital rooms with rent above ₹5,000, which will be taxed at 5% without input tax credit. The rate change is applicable from 18 July.

A key expectation from the meeting was rationalisation in GST rate slabs following a report submitted by a Group of Ministers headed by Karnataka chief minister Basavaraj Bommai, which suggested rolling back tax exemptions and correction in inverted duty structures to prevent tax anomalies.

Bajaj noted that inflation was one of the factors that had been considered while asking the GoM to come up with more rate rationalisation measures at the GST Council meeting.

He said that the demand for rationalising rates to two levels from the present three slabs of 5%, 12% and 18%—excluding 28% levied on sin or luxury goods - would be difficult to fulfil as it was likely to be met with a lot of opposition.

Separately, Central Board of Indirect taxes and Customs chairman Vivek Johri said the government was looking at simplifying scrutiny and audit as the next steps to improve ease of doing business. "I do want to assure that we want to make the process easy and not be very intrusive in terms of audits and scrutiny," he said at the CII event.