The government on Friday ruled out according infrastructure status to the health sector saying the segment do not fulfil any of the major criteria necessary for such categorisation.
"... suggestions received from various quarters for according infrastructure status to the health sector has not been found acceptable during the last budgetary exercise," Minister of State for Finance S S Palanimanickam said in a written reply to the Lok Sabha.
He said that certain characteristics are required for a sector to fulfil criteria for being identified as an infrastructure facility, including involvement of high costs and asset specificity, its output being non-tradable and so on.
"Since the health sector does not possess these characteristics it cannot be categorised as 'infrastructure'," Palanimanickam said.
He added that the government has made a policy decision to move away from profit-based tax incentives and expansion of the scope of definition of 'infrastructure'.
The infrastructure status enables the players in the segment to avail of tax incentives.
Parliament was informed that various tax incentives are provided for the sector including tax holiday for five consecutive assessment years for new hospitals in non-metro cities under the Finance Act 2008 and deduction in respect of profits and gains in the North Eastern states.