Healthcare tax withdrawn as Lok Sabha passes Finance Bill

March 22nd, 2011 - 8:35 pm ICT by IANS  

Pranab Mukherjee New Delhi, March 22 (IANS) Finance Minister Pranab Mukherjee Tuesday withdrew the proposed 5 percent service tax on healthcare after protests from lawmakers and the medical fraternity, even as the Lok Sabha passed the Finance Bill 2011.

With the major opposition parties absent, the lower house of parliament passed the Finance Bill, which mainly contains the taxation proposals, by voice vote.

Earlier initiating the discussion, Mukherjee proposed to withdraw the controversial 5 percent service tax on healthcare announced while presenting the budget for 2011-12.

“I have decided to exempt the new levy in its entirety, both in respect of services provided by hospitals as well as by way of diagnostic tests until GST (Goods and Services Tax) comes into force,” Mukherjee said.

In the budget for 2011-12, the finance minister had proposed to levy five percent tax on services provided by hospitals with 25 or more beds that are centraly air-conditioned and on diagnostic tests of all kinds.

The finance minister also gave excise relief to small scale firms in the readymade garments business to tide over the impact of customs duty.

He announced basic reduction of custom duty on raw silk from 30 percent to 5 percent.

Mukherjee said fiscal consolidation and maintaining reforms and economic growth momentum has been given priority in the budget.

The government Tuesday introduced an amendment in the Lok Sabha to facilitate the roll-out of the proposed Goods and Services Tax regime.

Mukherjee said in the coming days three more bills — the revised Pension Fund Regulatory and Development Authority Bill, the Factoring and Assignment of Receivables Bill and the State Bank of India (Subsidiary Banks Laws) Amendment Bill — will be introduced.

The finance minister presented the federal budget of Rs.12.58 lakh crore (Rs.12.58 trillion or $280 billion) last month and the debate Tuesday was on one of its components — the Finance Bill, 2011 — which mainly contains the taxation proposals.

A section of opposition members, led by the Bharatiya Janata Party (BJP) stayed away from the debate and did not participate in the voting on the Bill.

The principal opposition parties demanded that the house first take up for discussion a privilege motion against Prime Minister Manmohan Singh over his WikiLeaks comments.

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