(1) Notwithstanding anything contained in section 6 and section 18B, hospitals run by charitable institutions shall be exempted from tax on the sale of medicines, laboratory store items and consumables to their patients during the course of treatment, subject to the following conditions, namely:-

(a) they shall, on payment of a fee of ten thousand rupees, obtain a certificate from the Commissioner for an year, based on the registration of such institutions under section 12AA of the Income Tax Act, 1961 (Central Act 43 of 1961).

(b) the hospitals availing exemption as per this sub-section shall purchase only medicines which had suffered tax on the maximum retail price as per clause (e) of section 8 of this Act and with regard to other laboratory store items and consumables, only from dealers registered under this Act:

Provided that for the period up to 31st March, 2013, the exemption would be made operative only based on the certificate issued by the Commissioner considering the registration of such institutions under section 12AA under the Income Tax Act, 1961 (Central Act 43 of 1961):

Provided further that such charitable hospitals shall not be liable to take registration or file returns under this Act.

(2) Notwithstanding anything contained in section 6 and section 18B, hospitals not covered under sub-section (1), shall be exempted from further tax liability on their sale of medicines and other consumables subject to the following conditions:-

(i) all the purchases of medicines shall be from dealers paying compounded tax as per clause (e) of section 8;

(ii) all the purchases of other consumables are made from dealers registered under this Act at the maximum retail price; and

(iii) they shall file option for availing this exemption before 30th April of every year:

Provided that if such hospitals pay the entire tax assessed/determined on or before 31st March, 2014, they shall not be liable to pay any penalty and/or interest under this Act.