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Times of India
15 March 2011
By Umesh Isalkar & Dipannita Das
Pune, India

Taking cognisance of the pressure stepped up by medical practitioners across the country against the imposition of five per cent service tax on healthcare and diagnostic services, the union government has begun assuring medicos that the service tax on health care will soon be scrapped.

"We have ceased the campaign against the move following assurance received from the union government that service tax will be withdrawn and infrastructure status will be given to health sector two days ago," cardiac surgeon Devi Prasad Shetty, chairman of Narayana Hrudayalaya, Banglore told TOI on Monday.

Denouncing the move, Shetty, in an open letter addressed to the ‘aam aadmi’, had stated, "This is not a ‘service tax’, it is a ‘misery tax’ since the government wants to make money out of your misery. Please do not think that only rich people will be taxed since the proposal says only air–conditioned hospitals need to pay the tax.

No surgery, simple or complex, can be performed without an air–conditioned operation theatre. Legally, a blood bank cannot get a licence without air–conditioning. CT, MRI and catheterisation labs do not function without air–conditioning. Simply put, hospitals cannot function without air–conditioning!"

The Indian Medical Association also criticised the move from various platforms and sent a letter to the Prime Minister on March 1, requesting reconsideration of the imposition of service tax on health care and diagnostic services.

"The union government is thinking on scrapping the service tax on healthcare. Some of our office bearers in Delhi who personally met the Prime Minister have also been given the assurance a few days ago," said Devendra Shirole, national vice–president of IMA.

Presenting the Union Budget for 2011–12, finance minister Pranab Mukherjee had proposed a five per cent service tax on medical services, including diagnostics, provided at centrally air–conditioned clinical establishments, having more than 25 beds for inpatient treatment. The service tax is also to be levied on services provided by consultant doctors operating from such hospitals.

Confirming, the office bearers of the union finance ministry said, "The proposal to scrap the service tax on health care and diagnostic services will be first mooted in the house. The decision will be taken after that."

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