The government today said the proposal to impose service tax on healthcare will not hurt the common man as only services provided by the centrally AC hospitals with more than 25 beds would attract the new levy.

“As far as CBEC is concerned… we think health services will also have to be brought under the (tax net)…and it should not affect the common man,” Central Board of Excise and Customs (CBEC) Chairman S Dutt Majumder said at the post budget conference organised by the AMCHAM here.

“We are talking about central air-condition, not air- condition. And even private hospitals (with) central air condition and more than 25 beds will be covered,” he added.

Finance Minister Pranab Mukherjee in the Union Budget for 2011-12 proposed to impose a service tax of five per cent on all services, including diagnostic services, provided by a centrally air-conditioned clinical establishments having more than 25 beds for in-patient treatment.

Besides, the service tax would also be levied on services provided by consultant doctors operating from premises of such hospitals.

Majumdar further said that healthcare services provided by the government hospitals and those run by municipalities will not attract the new levy.

The decision to impose 5 per cent service tax on healthcare provided by private hospitals evoked sharp reaction from the medical community which described the tax as “misery tax.”

Demanding withdrawal of the proposed tax, the IMA, in an open letter to Prime Minister Manmohan Singh had said,”Such efforts of the government to earn revenue from the misery of its citizens, reminds us of the salt tax imposed by the British government on innocent citizens — the modern day salt tax — ill-health tax.”

The medical fraternity has also decided to observe March 12 as “misery day” to press for roll back of the proposed tax on health care.

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September 2021