The government could roll back the service tax that has been imposed on 25 bed hospitals and diagnostic centers.
Unveiling the Union budget for the next financial year, finance minister Pranab Mukherjee said that the service tax on health check-ups will be replaced with a tax on all services provided by hospitals with 25 or more beds and having central air conditioning, with an abatement of 5%, keeping the government hospitals outside this tax net.
The issue will be discussed, revenue secretary Sunil Mitra said. He also said that service tax on healthcare is basically meant to apply to high end treatments.
Several more services are being brought under the tax ambit as a mode of preparation for the proposed Goods and Services Tax (GST) slated to be rolled out next year.
The new system will subsume all indirect taxes. “We are moving towards GST, which will have a comprehensive negative list. There should not be any apprehension," he said.
Admitting that healthcare spending in the country as a percentage of GDP is still low compared to other emerging economies, Mukherjee earlier said that healthcare and education remain priority sectors for the government. He said health is a state subject and the centre would hold discussions on the issue with the state governments.
The minister said that spending on healthcare is slated to increase significantly in the 12th Plan, which would be rolled out by the Planning Commission next year.