Service Tax on Healthcare Services

Government has awarded the healthcare sector with a whopping 5% service tax (It is actually same as 10 % but there is a temporary abatement of 50% which will soon be withdrawn)

I expect this was a long time reward needed for the health sector simply because this sector has remain always a mystery sector as nobody knows how much it worth, there are only assumptions from various intelligent consulting sector who are always future savvy in projecting its high worth after 5 years or 10 years even without knowing how is it today?

It is well known that our government failed  to understand the need of an ordinary Indian citizen but now it has taken a desperate step to tax rich people (I think it is true)and give away the collected money to public health sector which is managed by itself .

This was one of the easiest and fastest steps any Indian government has taken to improve our poverty ridden public health sector. Thus in future public health care would be funded by the already too –expensive private healthcare industry.

Being from health sector I also feel the punch , service tax is again a challenge for health sector to start all its functions more ethically (I mean eradicating the illegal cut system).

But it is quite evident that most of our government policies for health sector are big failure due to the non –existing accurate data and knowledge, this is the only reason that service tax on cash less facility was also manipulated by the insurance sector.

But still I believe that service tax on healthcare has some hidden positive points and negative points, & this can:

a)      Reduce the Growth of healthcare sector.

b)      Promote professional system of commercial work.

c)       Increase the healthcare burden on Middle class & upper class.

d)      Control the black money distributed through cut system.

e)      Promote the financial health of hospitals.

f)       Channelize patients to smaller nursing homes thus promoting nursing home unsafe culture.

g)      Increase hospital based infection.

h)      Strengthen the financial department in hospitals.

i)        Highly promote insurance sector (through higher control & justification to increase policy cost).

j)        Put pressure on pharmaceuticals & medicaments market.

k)      Severely affect the growth of Diagnostics chains (labs & Radio-diagnosis centers).

l)        Affect the earning capacity of Healthcare manpower.

m)    Providing more accurate data on healthcare expenses & future budgeting.