The central government should now think of giving complete tax exemption to the healthcare sector as that will pave way for the healthcare players to provide the much-needed affordable healthcare services in the country, said Dr Devi Shetty, founder and chairman, Narayana Hrudayalaya Group, adding that the high levies are denting the growth of the healthcare space in the country.
Only if the sector is offered the exemption, hospitals would be able to give the patient a 25 per cent reduction in treatment costs. This would translate into a major relief for the growing semi-urban and middle income patients in the country, he said.
Indian healthcare allocation is a mere three per cent of the GDP but the government has ensured it is taxed as high as 27 per cent which gets into the exchequer of both the central and state governments. Giving a break up for the 27 per cent tax levy only for the infrastructure, Dr Shetty said that it covers from excise duty to the cost of electricity.
Some of these taxes are excise duty of 12.36 per cent, customs duty of 7.13 per cent which can go up to 12.36 per cent, central sales tax varying from two per cent to 14 per cent and sales tax. While these are taxes for the basic infrastructure of healthcare sector, there is an additional levy for the medical devices which are indispensable in patient care. These cover 18 per cent of local taxes, 19 to 24 per cent of import duty for equipment, value added tax of 5.5 per cent, and dietary service tax of 14.5 per cent.
In addition to the above tax components, the state government’s electricity boards mandate paying up a refundable deposit of Rs.1 crore and the irony is that the hospitals could never get the refund unless these are shut down, he pointed out.
Further, the government has categorized the healthcare industry under entertainment segment and is forced to pay the Rs.7 per power unit. “This is unreasonable because much of the power consumed by healthcare providers is to save the patient. Like for instance lights and instruments running on power in operation theatres and intensive care unit, among others. The diagnostic labs need power to preserve the scores of samples coming in for tests. While these are only a few examples, the government has failed to comprehend that the use of power is primarily to save patient lives.
Therefore, if they make efforts to take a re-look at the tax rates and revise to an extent of ensuring that it cuts the maximum levy, it would reduce the burden on the patients, Dr Shetty said at the Karnataka Health Summit organised by the Confederation of Indian Industry (CII) where the theme was 'Tipping Point for Healthcare System'.
The big task for India is that it should now look at dissociating healthcare from affluence and the way forward was that its population should pay a small and miniscule sum for health insurance on similar lines of the Yeshaswini, Vajpayee Arogya Shree, Rajiv Arogya and Kalaignar. In fact Yeshaswini scheme is now seen as the most successful models of micro insurance scheme from which many more viable ventures are springing up. These are the efforts that private healthcare players can support to ensure dissociating healthcare from affluence, pointed out Dr Shetty.