Treatment in a private hospital is going to pinch all pockets with the proposal to impose 5% service tax for all services.
This includes diagnostics, check-up and treatment in centrally air-conditioned private hospitals with a bed capacity of over 25 beds that will increase hospital bills substantially. All government hospitals are exempt from this tax.
Similarly, hotel accommodation with tariff of more than Rs 1,000 per day will attract a service tax of 5%. Air-conditioned restaurants with licence to serve liquor will now be paying service tax "with an abatement of 70%" — the effective burden on consumers will be only 3%.Mukherjee said service tax imposed on health check-up or treatment last year had "resulted in differential treatment between persons who make payments themselves and others where payments were made by an insurance firm or a business entity."
"Thus I propose to replace it with a tax on all services provided by hospitals with 25 or more beds that have the facility of central air-conditioning," said Mukherjee.
"Though the tax is on high-end treatment, I propose to sweeten the pill by an abatement of 50% so that the actual burden is kept at 5% of the value of service."
Cardiac surgeon Dr Naresh Trehan, chairman, The Medicity, said, "The budget is disappointing for two major reasons: one, government health spending needs to go up by at least 40% for India to catch up in healthcare delivery. Second, there is no wisdom in burdening people who are ill and distressed. Optional services should be taxed.”
"Five per cent service tax on healthcare is the misery tax. People sell everything they have to arrange for a major operation like heart, brain or kidney," Devi Shetty, chairman of Narayana Hrudayalaya group of hospitals.
Nakul Anand, president, Hotel Association of India, said, "Service tax levied on accommodation and restaurants in certain categories will impact tourism but it is hoped that the introduction of goods & services tax would address this."