NATHEALTH Recommends 5% GST on Healthcare Supply Chain

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With a presumption that the Goods & Service Tax (GST) rate on the final sale of patient care/diagnostic services by the hospitals/clinics to their patients would remain exempt from indirect taxes, Healthcare Federation of India (NATHEALTH) has recommended a 5% GST rate on earlier part of the healthcare supply chain such as supply of medical equipment/services to the hospital/clinical establishments.

In a letter of recommendations, recently submitted to GST Council, NATHEALTH urged that the overall tax cost in the healthcare supply chain needs to be as low and moderate as possible to achieve the nation’s dream of affordable and accessible healthcare to all, particularly the poorest and the most underprivileged sections of society.

“A rate of GST ranging between 8-10% as applicable today for Medical Equipment supplies to hospitals will help achieve neutrality, a lower rate will support the private healthcare sector, a higher rate will increase cost in the private sector and reduce investment opportunities,” Mr. Anjan Bose, Secretary General, NATHEALTH wrote to the Council.

“While we fully welcome the revised version of the Model GST law and proposals, it is our humble request that benefits/exemptions-– as envisaged under ScheduleIV vis-à-vis Government hospitals/clinical establishments-should also be granted to the hospitals/clinical establishments in the private sector,” he added.

Substantiating its stand, NATHEALTH said that Healthcare in India is a USD 70 billion industry accounting for 4% of GDP. Government spending on the public health care system represents 1% of GDP per annum. On the other hand, approximately 3% of GDP is spent in the private sector on healthcare. According to National Family Health Survey-3, the private medical sector remains the primary source of healthcare for 70% of households in urban areas and 63% of households in rural areas.

Other Recommendations include exemption from input GST in case of export-oriented manufacturing operations (Make in India).medical negligence

NATHEALTH said in the letter that in order to attain the goals of our ‘Make in India’ initiative, it is our recommendation that the Government/GST council should look into this aspect and make necessary provisions in the law/regulations to allow such export-oriented operations purchase their input goods/services without payment of any GST.

Considering the huge under-penetration and under-insured nature of the general Indian population, the primary objective of ensuring universal health coverage (as laid down under the National Health Policy, 2015) would be well served by exempting health insurance from GST since levy of tax on premiums acts as a disincentive for people to get health insurance coverage.

NATHEALTH has recommended for an exemption and said if exemption is not acceptable, at the very least, the Government/GST council can consider taxing the health insurance sector at a very low/concessional GST rate (certainly much lower than the current Service Tax rate).

Mr. Bose said, “We are very hopeful that all of these aspects would be considered by the Government while setting the GST rates and exemption structures in place.”

NATHEALTH pointed out that tax policy and the way that GST is implemented can have a positive, negative or neutral impact on the Healthcare sector. The Government has an important choice to make and a unique opportunity to introduce change through tax policy to support its overall healthcare strategy.

ET HealthWorld, 31 January 2017

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