Industry body FICCI has sought zero-rating GST on healthcare services to enable the service providers to claim input tax credit.
In a letter to the Finance Minister Nirmala Sitharaman, the chamber's President Sanjiv Mehta said "enabling this would not only ensure that the input tax credit chain is intact but will also make compliances easier and ensure that the input taxes are not loaded into the cost of healthcare services".
"Hence, it is our sincere request that the exemption of healthcare services from GST may kindly be discontinued, and the healthcare providers be allowed to avail the input tax credit," he added.
Sharing its views on the recommendations made in the recent GST Council meeting, the chamber said the incorporation of 5 per cent GST on room rent (exceeding Rs 5,000 per day) will go on to increase the cost of healthcare service to the patients.
"Further, the room rent is usually a part of the package rate for a treatment, and taxing only one component of the package will create confusion and will lead to deconstructing of the packages, which is against the current practice being encouraged by the government," FICCI President said in the letter.
He said under Ayushman Bharat-PMJAY scheme and other health insurance schemes, the government has been encouraging the private sector to keep the patients informed of the cost of entire treatment through package rates.
"Furthermore, these taxes are increasing the cost of compliance for the hospitals and making the entire compliance process more perplexing. This will defeat the government's intention of bringing about ease of doing business," Mehta said.
He also highlighted that over the past couple of years, the net impact of revised tax rates on inputs (goods and services) consumed by hospitals has increased, including the taxes on some of the medical equipments.
"As this incremental cost is ultimately borne by the patients, it will not serve the intention of the government to provide affordable healthcare to all," Mehta added.