Delhi residents seek rollback of service tax on hospitals

March 2nd, 2011 - 7:11 pm ICT by IANS  

Pranab Mukherjee New Delhi, March 2 (IANS) Smaller private hospitals and clinics are planning to hike the bill for patients, two days after the budget proposed a service tax on 25-bed hospitals and diagnostic check-ups. The impending increase in the cost of medical services has left people fuming.

“Government hospitals are so packed, it is difficult to even get close to the doctor. Private hospitals are so costly that we think twice about going there. Smaller clinics and hospitals were where we could go. But now they too would pinch our pockets,” said Usha Kaushal, a housewife.

“Unlike government officials, we don’t have the facility of availing (Central Government Health Scheme) CGHS under which healthcare is free. For people like us who have no healthcare cover, it is difficult,” said the 60-year-old woman.

Presenting the budget for 2011-12 Monday, Finance Minister Pranab Mukherjee proposed to replace the service tax on health checkups with a tax on all services provided by hospitals with 25 or more beds and having central air-conditioning, with an abatement of 5 percent.

What is worrying people is that hospitals that come under the ambit of this will pass it on to patients by increasing the cost of medical services.

Similar views were shared by Tara Singh, a 57-year-old resident.

“It’s always the middle class which gets caught in the budget. The government never gives any thought to us. Healthcare is very important as there are so many medical problems and getting treatment is so costly. This new service tax will further make it costly. Hospitals will obviously charge us more.

“It is not at all for the aam admi and should be rolled back,” said Singh, who retired from a private company.

Hospitals in the capital have already started discussions on how to handle the proposal.

“If service tax is imposed on us, we can only get it from patients and we will increase the cost of medical treatment,” said a senior manager of Kolmet Hospital, a 39-bed hospital in central Delhi.

Terming it as “unfortunate”, two such premier institutions said they would increase the burden on the end user.

“It is unfortunate the finance minister has chosen to levy a service tax on air-conditioned hospitals having a bed capacity in excess of 25 beds. This comes at a time when the healthcare sector is already bearing the brunt of an inflationary spiral since the last few months,” said Pervez Ahmed, CEO and managing director of Max Healthcare.

It is the patients who are likely to bear the brunt of the hike in service tax, healthcare firms said.

“The budget has levied a service tax on hospitals and diagnostic service providers and with this the end user, the patients, will end up paying much more. This is detrimental to the concept of preventive healthcare and early diagnosis,” said Prathap Reddy, chairman of the Apollo group of hospitals.

“We will be forced to pass on this tax to the patients, something that will certainly cause a lot of heartburn among our customer,” he added.

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