NATHEALTH (Healthcare Federation of India), India’s apex healthcare body, has urged the government to exempt the healthcare services from Goods & Services Tax (GST). Healthcare is currently exempted from service tax and the federation demands this should continue at least for a period of ten years. Only after 10 years a decision to levy service tax should be considered, after assessing the status of healthcare coverage, costs and performance on key healthcare metrics.
Anjan Bose, secretary general, NATHEALTH said that GST once implemented, would put various sectors under the purview of service tax. Levying service tax on healthcare services and facilities will be a retrograde step which will push back the agenda to provide universal healthcare. The current stage of development of the healthcare industry cannot afford levy of service tax.
Bose emphasized, “Given the long payback period, extension of the tax holiday to ten years instead of five will improve the business case for investment. The lack of skilled healthcare resources in non-metros and tier 2, 3, 4 cities makes the payback period even longer”.
With the huge impact of NCDs (non-communicable diseases) on the Indian population, it is absolutely imperative to increase the focus on prevention and preventive healthcare. WHO statistics clearly states that more than 52 lakh lives are lost annually in India alone. The death rate in urban India is expected to rise by 42 per cent by 2021, out of which NCD alone will account for around 62 per cent DALY (disability adjusted life year) losses. One person dies of a stroke every minute in India. Every 6th patient below 40 years is a victim of cancer and CVD. The economic burden of NCDS in India will be 6.2 trillion USD during the period of 2016-2030.
Highlighting the need to focus on preventive healthcare, Bose stressed that in order to achieve the government’s stated objective of universal health coverage, the tax exemption on preventive health checkup should be raised from the current Rs.5000 to Rs.20000 under section 80-D of Income Tax Act 1961.
NATHEALTH recommends the government to withdraw service tax on Health Insurance Premium which acts as a deterrent to consumers. Healthcare is not taxed for services so the same principle should be applied for healthcare financing as well, added Bose.
To bolster skill development in healthcare, government needs to consider introducing special incentives for health sector skill development and make it easier to collaborate with eminent overseas training partners. This would necessitate increased budgetary provisions for healthcare sector skill council and relaxation of taxes on training aids and import of training materials, said Bose.
Considering the huge demand and supply gap of doctors, health sector needs strong incentives to set up medical colleges. Free and concessional land in setting up private medical colleges will incentivize more players to get into medical education. To encourage quality and innovation, government should provide a longer term (10-year window) for 250 per cent deduction of approved expenditure on R&D activities.
Further he said, “We are hopeful that in the upcoming budget the government will consider the recommendations for the entire healthcare value chain, which will result in progress of Indian healthcare sector.”