Finance minister Pranab Mukherjee proposed amendments in service tax
and extended it more areas. Earlier, 117 segments were under service
tax, now the unchanged rate of 10% tax on services will be levied on 320
more which is amajor concern for the hospitals coming up in the
country.
The amendment has been termed 'ambiguous, impractical and illogical'
by experts in the healthcare industry as it will make healthcare all the
more costlier than it is today.
As per amendments in the budget,
service tax has been widened to cover some categories of hospitals and
diagnostic tests. AC hospitals with more than 25 beds have been brought
under the ambit of service tax. Healthcare industry experts have termed
this as an 'improper' step.
Dr Milan Chag, a leading cardiologist
and managing director of The Heart Care Clinic and Care Institute of
Medical Sciences, said,
"The imposition of new service tax for
treatment in any air-conditioned hospital with a bed capacity of more
than 25 means adding 10% to patients' total hospital bill. This is
illogical and improper. Ultimately, the end consumers, i.e. patients,
suffer as this will automatically raise their bill by 10%," said Chag.
In
most cases, of the total bill, 50-70% cost is of medicines and
consumables and these cannot be defined as 'services'. However, with
this additional new tax, the total sum of the hospital bill including
the cost of medicines and consumables will increase by 10% which is an
unfair hike, explained Dr Praful Pawar, CEO, Apollo Hospitals.
Industry
sources say that the finance minister needs to think hard on this
proposed amendment. The government must modify it and exclude medicines
and consumables from the total bill, say healthcare industry experts.
Pankaj
Patel, chairman and managing director, Zydus Cadila, said, "Overall,
the budget is a stability-oriented one with thrust on infrastructure and
allocations for healthcare sector.However, the new service tax would
hamper the growth of the healthcare industry."
Echoing a similar
view, Dr Vikram Shah, director, Shalby Hospital said, "This proposed new
tax would burden the patients. And to avoid the increase in the costs,
the healthcare service providers would not prefer to fall under the
organised sector. This amendment if not modified would kill the growing
segment of healthcare industry."