Tax on Healthcare services may go in Budget revisit, hints FM

NEW DELHI: The government has indicated that it will reconsider the imposition of service tax on healthcare and re-examine other contentious tax proposals announced in the Union Budget 2011-12 . "Since the presentation of the Budget 2011-12 , I have received several suggestions and representations , including feedback from Members (MPs) on taxation proposals. These are under examination ," Finance Minister Pranab Mukherjee said during discussions on the Budget in Lok Sabha on Friday.

The minister also said that educational institutions and hospitals would be treated as infrastructure sub sectors and capital investment in them would be eligible for the finance ministry?s Viability Gap Funding Scheme. Commenting on the power situation , Mukherjee said "We hope to add 15,000 MW by the end of the current financial year. India has already added about 10,462 MW power capacity from April 2010 to February 2011, which is one of the highest capacity addition.

"Without power we cannot have the desired level of growth. Therefore emphasis was given... We have added a capacity of 10,462 MW during this year itself in the current plan, which is higher than the capacity added in any of the previous years," Mukherjee said. Power minister Sushil Kumar Shinde has exuded confidence the country could exceed 15,000 MW capacity by end of this fiscal.

Even though India has initiated various initiatives including Ultra Mega Power Projects (UMPPs), the demand for electricity is growing. The capacity addition target for the 11th Five Year Plan (ending March 31, 2012) is little over 62,000 MW. Currently, India has installed power generation capacity of over 1.75 lakh MW.

Mukherjee also said the country has started a process to trace black money stashed away in foreign banks. He said the government would work under the legal framework to bring the money back and punish the culprits. The finance minister said the government had started a legal proceeding to book the culprits.

Rollback Chorus

The government will revisit some of the proposals in the Budget 2011-12 that have led to high-pitched demands for rollback from various industry segments, FM Pranab Mukherjee said on Friday. ET takes a look at the contentious proposals:

SERVICE TAX ON HOSPITALS

10% service tax, with an abatement of 50%, on treatment at hospitals with 25 or more beds with central air-conditioning and diagnostic test services.