Service tax on healthcare is ‘misery tax’, says medical community; demands proposal be scrapped
Moneylife Digital Team 08 March 2011

Medical activists to observe 12th March as ‘Misery Day’ to protest against proposed service tax, demand rollback

The Union Budget proposal to levy 5% service tax on healthcare services has been severely criticised by the medical community, which has described it as a "misery tax". The community says the proposal to tax healthcare adds to the concerns of the common man, and it has demanded that it be scrapped.

Dr Devi Prasad Shetty, chairman of Narayana Hrudayalaya, has in an open letter addressed to the aam aadmi, said, "This is not a 'service tax', it is a 'misery tax' since the government wants to make money out of your misery. Please do not think that only rich people will be taxed since the proposal says only air-conditioned hospitals need to pay the tax. No surgery, simple or complex, can be performed without an air-conditioned operation theatre. Legally, a blood bank cannot get a licence without air-conditioning. CT, MRI and catheterization labs do not function without air-conditioning. Simply put, hospitals cannot function without air-conditioning!"

"British Raj taxed salt and our government taxes our miseries", Dr Shetty said.

The medical fraternity has called on people to observe 12th March as "Misery Day", to protest against the proposed service tax and demand that it be rolled back.

Presenting the Union Budget for 2011-12 last week, finance minister Pranab Mukherjee proposed a 5% service tax on medical services, including diagnostics, provided at centrally air-conditioned clinical establishments, having more than 25 beds for in-patient treatment. The service tax is to be levied also on services provided by consultant doctors operating from such hospitals.

Nagesh Kini, chartered accountant and Mumbai-based social activist, said, "Ultimately, it is the common man who will have to pay this. I do understand that air-conditioning is required for MRI, blood bank and such other facilities, but the taxes will only burden the common man. I agree totally with Dr Shetty's statement. "

Dr Shetty said in his open letter that taxes would only increase the already high cost of healthcare in India, putting quality treatment out of the reach of the common people. Therefore, "service tax, both old and new, must be withdrawn for all variety of services including diagnostic services, payment by insurance companies, etc. Also all varieties of taxes like central sales tax, customs duty, VAT on health sector to be withdrawn for at least ten years, till all citizens have access to affordable healthcare."

Dr Gustad Daver, director professional services, P D Hinduja National Hospital and Medical Research Centre, told Moneylife, "The more the taxation, the more the cost of treatment. This directly affects common people. The cost of high-end treatment is already unaffordable and adding to it is the service tax, which will increase the burden on people. We are working to bring the cost of treatment down and such taxes will make it impossible for us. I sincerely hope that the government rolls back the service tax."

On Monday, a Press Trust of India report quoted S Dutt Majumder, chairman, Central Board of Excise and Customs (CBEC), as saying that "as far as the CBEC is concerned, we think health services will also have to be brought under the (tax net) and it should not affect the common man. We are talking about central air-conditioning, not air-conditioning. And even private hospitals (with) central air- conditioning and more than 25 beds will be covered."

Mr Kini responded to Mr Majumder's statement saying, "This is totally incorrect. No one but the common man will suffer because of this service tax."

1 decade ago
Dear FM please roll back the 5%tax.
As Educational cess helped in improving literacy please increase VAT BY 2.5% towards providing health care for every one the rich and the poor as the rich contribute maximum and let the health care be made free as the government has already covered the below poverty families by providing a health care card,the same should be extended to all sections of the population this prevents the so called insurance companies from making money and the hospitals private and government get the share as per the treatment provide to the citizens of India.
When a small African country like Ghana can implement successfully why cannot India do it.
1 decade ago
It is unfortunate and against the all human being and the Govt must take back it.If Govt needs more funds it should control corrpution and take some tax from Neta's who has manuplated funds.
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