Mumbai: An apex body of the healthcare sector today urged the government to exempt healthcare services from Goods and Services Tax (GST), increase tax exemption on preventive health checkup and set up healthcare infrastructure medical innovation funds.
In its pre-budget recommendations, Healthcare Federation of India (Nathealth) said exemption from GST will help in achieving the goal of universal healthcare coverage.
"GST, once implemented, would put various sectors under the purview of service tax. Healthcare is currently exempted from service tax and this should continue after the GST regime at least for a period of ten years and only thereafter should a decision to levy service tax be considered, after assessing
the status of healthcare coverage, costs and performance on key healthcare metrics," Nathealth Secretary General Anjan Bose said in a statement here.
Levying service tax on healthcare services and facilities will be a retrograde step which will push back the agenda to provide universal healthcare. The current stage of development of the healthcare industry cannot afford service tax, Bose said.
Highlighting the need to focus on preventive healthcare, Bose stressed that in order to achieve the government's stated objective of universal health coverage, the tax exemption on preventive health checkup should be raised from the current Rs 5,000 to Rs 20,000 under section 80-D of Income Tax Act, 1961.
The healthcare body also recommended the government to withdraw service tax on health insurance premium. Healthcare is not taxed for services, so the same principle should be applied for healthcare financing as well, Bose said.
Nathealth president Sushobhan Dasgupta said, "We have urged the government to increase the depreciation rate applicable on medical and pathological equipment and medical devices from 15 to 30 per cent."
At present, corporate income tax incentives are given on capital expenditure for hospitals with 100 beds and above, which needs to be revised for greenfield hospitals with 50 beds. This will encourage much-needed healthcare facilities in tier 2, 3 and 4 cities, Dasgupta said.
Government should also set up a healthcare infrastructure fund and a medical innovation fund which would encourage entrepreneurship and newer business models, it said.
"Government can consider providing seed capital for such fund, Dasgupta added.