Pressure mounts to drop tax on healthcare

New Delhi: The government on Friday remained non-committal on withdrawal of service tax on healthcare services, even as the medical practitioners stepped up pressure for roll back of the proposal.

"We are getting representations (for withdrawing the proposal to impose service tax on health care). That is all I can say," Central Board of Excise and Customs Member (Budget) Y G Parande told reporters when asked about the possibility of rolling back of the proposal.

Finance Minister Pranab Mukherjee in his Budget for 2011-12 proposed to levy service tax on treatment carried out at 25-bed hospitals with central air-conditioning and diagnostic test services.

The proposal had evoked sharp reaction from the medical community with doctors describing it as "misery tax" and the Indian Medical Association (IMA) calling is as "salt tax on the sick and ill".

The IMA, in an open letter to Prime Minister Manmohan Singh today said, "Such efforts of the government to earn revenue from the misery of its citizens, reminds us of the salt tax imposed by the British Government on innocent citizens — the modern day salt tax — ill-health tax."

The Association urged Singh to withdraw the proposal of imposing service tax on hospitals and diagnostic services and consider granting infrastructure status to all healthcare services.

Irked by the proposal, the medical fraternity has decided to observe March 12 as "misery day" to press for roll back of the proposed tax on health care.

Describing the proposal as "misery tax", Devi Shetty, founder of Narayana Hrudayalaya had asked citizens to submit memorandum to all state governors for roll back of the proposed tax.

Another noted cardiac surgeon Naresh Trehan, chairman and managing director of Madanta, had called the proposed tax as "cruelty" during an interaction with Mukherjee earlier this week.

If the proposal is approved, the treatment in 25 or more beds with central air conditioning would attract a service tax of 10 per cent with an abatement of 5 per cent.