With a view to encouraging investment in hospitals in non-metro areas, the benefit of sub-section (11B) of section 80-IB had been extended last April to hospitals located anywhere in India, other than defined excluded area. Sub-section (11B) of section 80-IB provides for a tax holiday for five consecutive assessment years, beginning from the initial assessment year, to an undertaking deriving profits from the business of operating and maintaining a hospital in a non-metro.
However, the finance minister announced on Thursday that the tax relief would also apply to new hospitals with over 100 beds in previously excluded area which includes the urban agglomerations of Greater Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Bangalore and Ahmedabad, the districts of Faridabad, Gurgaon, Ghaziabad, Gautam Budh Nagar and Gandhinagar and the city of Secunderabad.
Availability of modern hospitals is a priority area for the country and private sector participation is desirable in order to provide better healthcare facilities to citizens. Currently, hospitals (of more than 100-bed capacity) constructed in any area other than the excluded area are eligible for claiming hundred per cent deduction under section 80-IB (11C) of the Income Tax Act, finance minister Pranab Mukherjee said on Thursday. Considering the pressing need for more hospitals all over the country, it is proposed to include the business of a new hospital anywhere in India, with at least one hundred beds for patients, as a specific business for availing the benefit of investment-linked deduction, he added. Tax benefit is now available to hospitals which are constructed and have started or would start functioning at any time during the period beginning the 1st day of April, 2008 and ending on the 31st day of March, 2013.