FM drops proposal for `misery tax' on healthcare
22 Mar 2011
Finance minister Pranab Mukherjee today granted some relief to the common man by withdrawing the proposed 5 per cent service tax on air-conditioned hospitals with more than 25 beds and on diagnostic services.
He also announced a higher abatement in the levy of taxes on retail price of some branded garments and textile made-ups, providing some relief to the readymade garment manufacturers.
The proposed service tax on air-conditioned hospitals and diagnostic centers would only have added to the misery of the common man while leaving the hospitals unaffected.
"The purpose of the new levy (healthcare) was not merely to mobilise revenue, but to pave the way for introduction of the GST. However, I have decided to exempt the new levy in its entirety both in respect of services provided by hospitals as well as by way of diagnostic tests until GST comes into force," he said while moving the Finance Bill in the Lok Sabha.
The announcement of the withdrawal of the service tax on healthcare, which the opposition parties have dubbed "misery tax" was greeted by both the ruling and opposition parties.
Garment traders had opposed the proposed 10 per cent excise duty on readymade garments saying it would hurt the small business.