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AC hospitals, pathological labs, doctors to come under service tax

The union finance minister Pranab Mukherjee has proposed to increase the health budget by 20 per cent to Rs 26,760 crore for the year 2011-12. The finance minister has also proposed to levy 5 per cent service tax on services provided by centrally air-conditioned clinical establishments with 25 in-patient beds, tests conducted at diagnostic clinics and pathological labs and consultant doctors practicing at these establishments.

Commenting on the budget proposals, Dr Prathap C Reddy, chairman, Apollo Hospitals Group, said, “The budget has levied service tax on hospitals and diagnostic service providers and with this the end user, the patients, will end up paying much more than earlier. This is detrimental to the concept of preventive healthcare and early diagnosis which is pivotal to address the mounting burden of chronic diseases.”

Dr Pervez Ahmed, CEO and managing director, Max Healthcare, added, “It is unfortunate that the finance minister has chosen to levy a service tax on air-conditioned hospitals having a bed capacity in excess of 25 beds. This comes at a time when the healthcare sector is already bearing the brunt of an inflationary spiral since the last few months.”

A lack of emphasis on childcare in the health budget was highlighted as a shortcoming by some NGOs.

“The total health budget has increased by 21 per cent. But the budget for the National Rural Health Mission has only increased by 15.5 per cent. Given the nearly double digit inflation, this is a nominal increase for a flagship programme that was conceptualized to help India meet the Millennium Development Goals on reducing maternal and child mortality,” said Thomas Chandy, CEO, Save the Children.

“Yet again, initiatives to reform the healthcare agenda have gone unanswered in the union budget. Though the budget had a significant allocation for infrastructure, not finding healthcare takes another year away in bridging the affordability and accessibility gap in our country,” said Dr Prathap C Reddy. [Source: IANS]

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