Hospital associations have expressed concerns over the Goods and Services Tax (GST) Council’s decision to impose a five percent tax on hospital room rents (excluding intensive care units), saying that it will adversely impact patients as well as private healthcare facilities.
The Association of Working Group of Hospitals, in a letter to Finance Nirmala Sitharaman, said that such a recommendation will be contrary to the spirit and policy of the Government of India — to provide affordable healthcare to all, Money Control reported.
A copy of this letter has also been sent to Prime Minister Narendra Modi and Union Health Minister Mansukh Mandaviya.
“It is mentioned in the order that there will be no Input Tax Credit and hence the entire cost will be passed on to the patient. This will considerably increase the total treatment cost to the patient,” the letter by Dr Girdhar Gyani to FM Sitharaman read.
The Association of Working Group of Hospitals comprises Association of Healthcare Providers in India (AHPI), ASSOCHAM, Federation of Indian Chambers of Commerce and Industry (FICCI), Indian Medical Association (IMA) and NATHEALTH.
“A decision like this will adversely impact patients as well as hospitals. Applying GST on patient beds will therefore become contrary to the very spirit set in health policy of 2017, more so when the majority of the Indian population still pays for healthcare out of pocket,” Gyani said.
The association has urged the finance minister to not allow the implementation of five percent GST on the hospital beds.
“Keeping in view the policies set by the government of India in 2017, it is recommended that no GST be levied across the spectrum of healthcare services,” it added.“The hospitals won’t get input credit on the additional five percent tax proposed by the GST Council. This will be passed on to the patients, which will be an additional burden for them,” said Gautam Khanna, Chair, FICCI Health Services Committee & CEO, P D Hinduja Hospital & MRC.
The letter has highlighted that insurance companies can set off the GST against tax collected on the insurance premium.
“This means the burden of the 5% tax is going to be borne by cash-paying patients who are more likely to be poorer than insured patients,” it added.
5 pc GST on non-ICU hospital rooms above Rs 5k will not hit affordable healthcare
The 5 per cent GST on non-ICU hospital rooms costing above Rs 5,000 will not hit affordable healthcare for a large section of people and the impact of the levy would only be miniscule, a top official said on Tuesday.
Responding to the representations of the industry, revenue secretary Tarun Bajaj also rejected the demand for zero-rating for healthcare industry saying such “carve-outs” may generate similar demands from other sectors, like education, and put upward pressure on taxation of other items in the GST net.
Industry body Ficci in a letter to the finance ministry on Monday said that 5 per cent GST on non-ICU hospital rooms above Rs 5,000 will increase the cost of healthcare services. The GST Council last week removed exemptions on this category of hospital rooms.
Addressing an interactive session organised by industry chamber CII, Bajaj said there are hardly any hospitals in small towns, which charge Rs 5,000 or more per day as rent for non-ICU rooms.
“I dont know there would be hospitals in smaller towns like Panipat or Meerut where the hospital rooms would be costing Rs 5,000 or above. I would also like to know how many hospital rooms are there in the country and out of those what are the percentage of rooms which are charging above Rs 5,000. I think it will be miniscule. So if I can spend Rs 5,000 on a room, I can perhaps spend Rs 250 on GST. This GST, which comes into a common pool, will be used for poor,” Bajaj said. “I don’t see any reason that there should be any such kind of messaging that 5 per cent GST on Rs 5,000-plus non-ICU room is hitting affordable healthcare,” he said, adding in case of a package deal for a treatment, the IT software can easily calculate the GST portion on the room rent.
“You have to be sure what you are charging from customer. If it is more than Rs 5,000, please go ahead with GST, if it is less than Rs 5,000, don’t go for a GST,” Bajaj said, adding the effort under GST is to widen the tax base so that tax rates can be lowered going forward.