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India Waives 5% Service Tax on Private Healthcare

Posted on Mar 28, 2011 by Sergio Ulloa ()  | Tags: Asian Healthcare, Fortis Healthcare, Healthcare, hospitals, India, Medical Tourism, tax

Patients seeking private medical treatment in India will no longer be faced with an upcoming 5 percent service charge. India's federal government last week announced the rollback of the planned tax on health-care services after encountering substantial pressure from opposition political parties, the healthcare industry as well as the general public. Giving his general budget speech before Parliament, Finance Minister Pranab Mukherjee stated: "The proposed levy on healthcare has raised considerable anxiety in the House and outside. We have decided to exempt the new levy in its entirety; both in respect of services provided by hospitals as well as by way of diagnostic tests until the Goods and Services Tax comes into force." The bill was later passed by the House. The original proposal, prepared by Mukherjee on February 28th for the 2011 budget, introduced a tax on all medical services, including diagnoses, provided by air-conditioned hospitals with a capacity exceeding 25 beds. The move instantly evoked a strong reaction from the medical community with several distinguished doctors dubbing the scheme a 'misery tax'. The proposal was in fact projected to increase the real cost of medical treatment for Indians by around 7 to 12 percent. The move to withdraw the service tax has been welcomed by the healthcare industry in India. Shivinder Singh, Managing Director for Fortis Healthcare (India) said: "We welcome the finance minister's decision to roll back the service tax proposed for the healthcare delivery sector. This positive step will benefit the common man, while providing a boost to the industry." Apollo Hospitals' Executive Chairman Dr. Prathap C. Reddy explained the present situation: "Inflation in healthcare sector has been over 300 per cent in past decade. The industry has still tried to contain prices. Now, with the government relenting by taking back the proposed burden on the sector, it is good news not just for the industry but also for the people," he added "I appreciate the rollback by the government. This new levy was like stretching pockets of over 85 per cent Indian patients." Ameera Patel, CEO and Executive Director of Metropolis Health Services, concurred that this was a positive development: "The new tax was a big drain on the pockets of patients, especially old people. It would have been a complete disaster," she said. The private healthcare sector is determined to support this initiative. Efforts to reduce their own costs will be given renewed impetus to boost the number of patients seeking preventative care and early diagnosis, helping to curb the rising prevalence of chronic diseases in India. During the past weeks budget discussions, almost all political parties had pressed the finance minister to remove the healthcare service duty. The announcement that the 5% service tax had been withdrawn was met with applause by members of Parliament. The medical tourism industry in India is also relieved that the healthcare service tax has been waived by the Finance Minister. Concerns arose that making private treatment in India more expensive would put their healthcare facilities at a competitive disadvantage against other Asian markets that also cater to international clients. A growing number of people from Western Europe, North America and Africa are visiting India every year for the sole purpose of receiving medical treatment. Patients are attracted by the lower costs and a high standard of private healthcare that remains comparable with the best in their home countries. The Indian medical tourism industry has been growing substantially and is projected to generate over $US2 billion a year in revenue by 2012. However, other Asian countries are also committed to taking advantage of this lucrative global market and are invested in building their own internationally-renowned healthcare facilities. Companies Mentioned Fortis Healthcare Fortis Healthcare Fortis Healthcare Limited, founded in 1999, is a leading healthcare provider with a network of 46 hospitals, satellite centers and heart command centers in India. The company also offers diagnostic, travel, IT and financial services through it's' wholly owned operation Religare Enterprises Limited. Apollo Hospitals Group Apollo Hospitals Group Apollo Hospitals is the largest healthcare provider in Asia, third largest in the world. The company operates 53 hospitals, a total capacity of 8500 beds, across Asia. The company also offers medical consultancy and pharmacy services. Apollo Hospitals was founded in 1983 and is based in Chennai, India Metropolis Health Services Metropolis Health Services Metropolis Health Services operate a chain of medical diagnostic and research facilities. The company has a worldwide network of operations. Metropolis was founded in 1981 and is based in Mumbai, India.
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