Finance Minister Pranab Mukhejree has announced withdrawal of service tax on healthcare, a PTI report states.

The finance minister had imposed a five percent service tax on diagnostic tests as well as on private clinics with more than 25 beds and central air conditioning as part of the union budget. However, the move -- termed as "misery tax" -- had seen widespread protests and a social-media campaign against it.

"The purpose of the new levy (healthcare) was not merely to mobilise revenue, but to pave the way for introduction of the GST. However, I have decided to exempt the new levy in its entirety both in respect of services provided by hospitals as well as by way of diagnostic tests until GST comes into force", Mukherjee said while moving the finance bill in the Lok Sabha for consideration and passage.

The budget proposal was heavily criticised by the medical fraternity, healthcare activists and people at large. Dr Devi Shetty of Bangalore ran an advertising campaign against "misery tax", while many joined social-media groups formed to oppose the move -- a Facebook page was launched by Governance Now too.

Governance Now also devoted the cover story of the current issue on this anti-people measure (read a curtain-raiser: The healthcare tax: Why FM's move would have been a sick one).

The rollback (Dr Shetty has termed it as a wise move) comes as a shot in the arms for the community of campaigners. While a nominal tax has gone, the larger issue -- the government apathy towards healthcare and the increasing presence of the private sector in this area -- remain. The campaign against the 'misery tax' should consolidate its gans and press for fundamental changes too.

Victory for the common man

Sonal Matharu

Finance minister Pranab Mukherjee on Tuesday announced a rollback of the five percent service tax on healthcare which was included in this year’s budget.

The doctors who vigorously spoke against the obnoxious step by the government to tax the sick are overwhelmed by the unity shown by the entire medical fraternity in convincing the government not to go ahead with the implementation of the tax.

It is a big relief to the public that the service tax on the services provided by the private hospital will not be imposed, said Indian Medical Association (IMA) president Dr Vinay Aggarwal. He adds that hopefully no such taxation will be imposed on the sufferings of the common man.

Renowned cardiologist Dr Naresh Trehan said, “It’s a great relief that the tax has been rolled back. Thanks to the government for appreciating the hardship it would have caused the people.”

The government announced in the parliament on February 28, 2011, that a five percent service tax will be charged on the services offered by private, centrally air-conditioned hospitals with more than 25 beds strength and on all diagnostic centres. The healthcare sector was up in arms against this tax which many said would burn a deeper hole in the pockets of the sick.

“Instead of giving health benefits to the people, the government is taxing them that too in the absence of an efficient public health system,” said Sakti Golder, research officer, Centre for Budget and Governance Accountability (CBGA).

Expensive medical treatments are already unaffordable for many and the new tax would have further shot up the healthcare expenditure. Following public outcry and pleas by the doctors and the health ministry, the government had to take back its words and spare the common man an added burden of service tax in seeking treatment from a private hospital.

The crippling public health infrastructure cannot take the burden of the healthcare needs of the country and when this gap is filled by the private hospitals, the government wants a share in that too, Aggarwal had told Governance Now. “Ultimately, this tax will be recovered from the patients,” he had said.

Campaigns were started against the ‘misery tax’ on the social media where people expressed their displeasure over the added tax burden on the sick. The tremendous pressure put on the government finally showed positive results with Pranab Mukherjee announcing a rollback in the parliament.

If the idea was to tax the corporate hospitals in India, it should have been clearly spelt out. The government cannot ignore that fact that there is a lot of distressed migration to the private healthcare sector where people have to seek treatment out of need and not out of choice.