Budget 2019: Healthcare sector expects hike in exemption limits for health checkup, medical reimbursement

Published: July 4, 2019 6:14:27 PM

The healthcare sector has many expectations from Union Budget 2019 - ranging from higher income tax exemption limits to GST relief to PMJAY for all and many more.

Budget 2019, Union Budget 2019 India, Budget 2019 India, Budget 2019-20, healthcare sector, GST, Section 80D, preventive health checkup, PMJAY, health insurance, healthcare cost, first woman Finance Minister, Nirmala SitharamUnion Budget 2019 India: With India’s first woman Finance Minister Nirmala Sitharam is all set to deliver her first budget speech, the healthcare sector is quite optimistic.

By Dr Rajeev Boudhankar, CEO-Bhatia Hospital Mumbai

With India’s first woman Finance Minister Nirmala Sitharam is all set to deliver her first Budget 2019 speech, the healthcare sector has many expectations ranging from higher income tax exemption limits to GST relief to PMJAY for all and many more.

According to the sector, the important issues that need to get attention from the Finance Minister are:

  • Greater provision for the National Rural Health Mission and National Urban Health Mission at least 50 thousand crores each.
  • Promote Health Insurance penetration throughout the country through local post offices and Aadhar card centres.
  • Direct tax benefits for capital expenditure, a 10-year tax holiday for hospital projects.
  • Preventive Health Check-ups: Tax exemption on preventive health check-up should have been raised from the current Rs 5,000 to a maximum of Rs 20,000 under section 80D of the Act.
  • Increasing the Tax Exemption on Medical Expenses: The current tax exemption limit of Rs 15,000 per annum towards reimbursement of medical expenditure by the employer is inadequate in comparison with the medical expenses incurred by the taxpayer and needed to be increased to at least Rs 50,000 per annum.
  • Exemption from Input Service Tax: Clinical Establishments are indirectly being subject to levy of service tax for use of various services which in fact increase the cost of treatment of medical services. Scope of healthcare support services needs to be expanded to include pathological services, dermatology, infrastructure and logistics support, in order to reduce the input tax.
  • Tax Incentives: (i) Should Extend the benefit of deduction under Section 35AD of the Act to a 50 bedded specialty centre which is focused on treatment of Non-communicable diseases (‘NCDs’). (ii) The healthcare business by its very nature needs to make continuous investments to upgrade existing capabilities. It is imperative to provide for a tax incentive in terms of substantial expansion to upgrade existing capabilities in an existing hospital. The Minister should recommend that the deduction under section 35AD of the Act may be extended to provide benefits to hospital incurring substantial expansion.
  • Tax Incentives for Specified Activities: Tax incentives should be provided for the following activities: (i) Digitisation: To boost the ‘Digital India’ initiative of the government, financial incentives/grants should be provided to institutions that are willing to move towards maintenance of Electronic Health Records (EHR) and Health IT Systems. Deduction of 250 per cent on investment made for the implementation of EHR should be extended.
  • Accreditation: To incentivise hospitals and diagnostic laboratories to undergo accreditation, there should have been 100 per cent deduction on approved expenditure incurred for securing accreditation from National Accreditation Board for Hospitals and Healthcare Providers (NABH) and National Accreditation Board for Testing and Calibration of Laboratories (NABL) respectively.
  • Remote care: Deduction of 250 per cent for approved expenditure incurred on operating technology enabled healthcare services like telemedicine, remote radiology etc should be allowed for improving accessibility, affordability & quality healthcare in remote areas.
  • The government should make health insurance coverage mandatory for all citizens in a phased manner initially covering the organised sector. Healthcare Infrastructure Upgradation Fund should be introduced apart from ‘National Priority’ status for healthcare sector.

In view of very low penetration of health insurance in the country, out-of-pocket spending for healthcare services is very high. For an effective management of population health universal health insurance would act as a powerful catalyst.

Starting with the organised sector, employees could be given the option of either paying their ESI contribution or purchasing insurance from any IRDA regulated insurance company. Scaling up PM-JAY to all citizens including middle and upper middle class needs to be done in the next phase.

Under the GST regime, healthcare services should continue to be exempt from taxes. Compared to developed nation, digital healthcare is the need of time in India. So, to make healthcare more affordable, high taxes levied on inputs such as consumables as well as on medical equipment (in the range of 12-18 per cent) need to be reduced.

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