“The (Finance) Ministry has been receiving number of representations from various quarters on this issue (proposed levy on health services). These may be considered by the Finance Ministry,” a highly placed source in the Department of Revenue told Deccan Herald.
“If there are convincing reasons in these representations the Finance Minister may take a re-look at the tax proposal,” the source said.
In the Budget presented in Parliament on Monday, Mukherjee had proposed to levy service tax on all services offered by hospitals with 25 or more beds that have centralised air-conditioning.
It also proposed to bring all diagnostic services under the tax regime. Against the 10 per cent service tax levy the Budget proposes to extend an abatement of 50 per cent so that the actual burden is kept at 5 per cent of the value of service. Government hospitals had been excluded from the levy.
However, the move triggered widespread disappointment and has been opposed by private health care service providers. There has also been discontent within the ruling Congress party which thinks that the levy would escalate health care costs and would cause “unwarranted” hardship to people already overburdened by the food inflation.
“Poor services in the government hospitals prompt low income groups to avail services of private clinics who would pass the tax burden on them. This would increase their hardship and dent the government’s pro-poor image,” political sources in the Congress said.
Leading health care providers have already asked the government to roll back the Service Tax in the interest of ordinary people.