CII wants heavy dose of tax breaks for healthcare

New Delhi, Nov 22 | Updated: Nov 23 2005, 06:21am hrs
The Confederation of Indian Industries (CII) has asked the government to accord infrastructure status and attendant benefits to the existing and greenfield hospitals in its pre-budget memorandum to the finance ministry. CII has also asked for tax exemptions on foreign exchange earnings, ranging from medical tourism, consultancy services to projects and operations situated outside the country.

The chamber asked the government to refrain from applying fringe benefit tax (FBT) on the healthcare industry. The application of FBT on expenses like entertainment and hospitality, tour, travel, etc for the healthcare industry becomes additional burden for the patient, making treatment more costly, the memorandum said.

CII has sought rectification of the words or a hotel to or a hospital under Sec 72 A (1) of the IT Act. While the law dealing with the carry forward of business losses was changed by an amendment to Finance Act 2003, the health facilities were not taken into account.

According to CII, most of the healthcare facilities were financially crippled with mounting losses due to various factors like absence of mechanisms for mergers and acquisitions.

Increase in the depreciation rate from 15% to 40% for life saving medical equipment is yet another demand made by the healthcare industry. The list of life saving medical equipments in Appendix I under item (xia) of the Income Tax Rules-1962, has to be extended, to be made eligible for a 40 % rate, the memorandum pointed out, while pleading that the 15 % rate will deplete investible surpluses needed for upgradation, modernisation and investment into latest technology.

CII has also asked for consolidation of taxes to be allowed for the industry. The non allowance of this provision will cause distortions to the extent of non incorporation of the tax impact of associates, joint ventures and subsidiaries, it said.

The industry body said the I-T Act should adress this by a deduction of a token Rs 2,500 per family per annum for preventive health check-ups.

If one were to tackle cardiac problems and cancer, early detection is the only effective cure as of today. Hence, preventive health requires emphasis and focus, the memorandum said.