The imposition of GST on hospital rent has raised fears of rising medical costs.
Apart from ICU, 5 per cent GST is being levied on hospital rooms which cost more than Rupees 5,000. In other words, if a hospital room is rented for Rupees 5,000, the patient will have to pay Rupees 5,250. The corporate world associated with healthcare thinks this will increase the cost of treatment overall.
Claims of finance ministry
On the contrary, the Modi government’s finance ministry claims that in the hospital usually the rich pays more than Rupees 5,000 a day for a room. If 5% GST is imposed there, the cost of treatment of common people is not going to increase. There are very few rooms in second or third class city hospitals whose rent is more than Rupees 5,000. But according to the hospital authorities, the rent of the hospital room is included in the ‘package’ of different types of medical expenses. Even if GST is levied on room rent, there will be no discount or ‘input tax credit’ on GST paid on raw materials. As a result, the tax burden on medical expenses will increase. Ordinary people have to meet that. If the patient’s health is insured, more money will be spent from the coffers of the insurance companies. But it is also unclear how the health insurance money will be matched if the hospitals exclude house rent from the medical cost package.
At a meeting of the GST council last week, it was decided to impose five per cent GST on rooms costing more than Rupees 5,000 in hospital. The board associated with the health service had hoped that the GST on health insurance and life insurance premiums would be reduced from 18 per cent. A recent report by SBI Research of the State Bank also recommended that while very few people in the country are covered by insurance, spending only 4.2 per cent of GDP on insurance premiums, levying 18 per cent GST on insurance premiums is not a good idea. In this case GST should be reduced to 5 percent or zero. But this recommendation was rejected before it was discussed in the GST Council. Instead, GST is levied on the rent of expensive hospital rooms.
FICCI has already written a letter to the Finance Minister objecting to this. The matter will also be taken up with the Ministry of Finance on behalf of the corporate world associated with business meetings and health services. The Congress has made a mockery, if the ED will now raid the houses of the FICCI officials! According to the Congress, in the days of Narendra Modi, the GST on diamonds is only one point five per cent. But five per cent GST on flour, cheese and yoghurt from hospital house rent.
Tarun Bajaj, revenue secretary at the finance ministry, had earlier said that anyone who could rent a hospital room for Rupees 5,000 could pay an additional Rupees 250.