Hospital chains upset over service tax proposal
The government's proposal to bring hospitals under service tax ambit will increase cost burden of patients and will be negative for the sector, said India's healthcare operators.
March 04, 2011 / 19:32 IST
The government's proposal to bring hospitals under service tax ambit will increase cost burden of patients and will be negative for the sector, said India's healthcare operators.
Finance Minister Pranab Mukherjee, while presenting the budget for 2011/12 on Monday, said the government will impose 5% tax on all services provided by private hospitals with at least 25 beds and central air-conditioning and also on all diagnostic tests.Private hospitals have expanded rapidly in the past few years in India, trying to fill in the huge gap left by government hospitals but have kept fees high, effectively barring poor patients from benefitting."Most hospitals have more than 25 beds and definitely air conditioning in hospitals is not a luxury but is a necessity to prevent infections," said Sangita Reddy, executive director, Apollo Hospitals Enterprises, adding any tax levied would be passed on to patients.Max Healthcare, a unit of Max India, expects the government move to have a negative impact on the healthcare sector."We will be forced to pass on this tax to the patients, something that will certainly cause a lot of heartburn among our customers," Pervez Ahmed, chief executive of Max Healthcare, said.Shares in Fortis Healthcare ended 0.86% up, while Apollo Hospitals ended flat and Max India down 0.39% on Monday. The Mumbai market closed up 0.69%. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
