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Hyderabad High Court stays luxury tax on hospitals

Hyderabad High Court stays luxury tax on hospitals

Telangana Private Hospitals and Nursing Homes Association (THANA), can heave a sigh of relief as a temporary stay by the Hyderabad High Court has given them some hope on the issue of 10% luxury tax on them.

The 2,500 members of THANA, including 1,200 city-based member hospitals were imposed to pay 10% luxury tax by the government.

The 10% luxury tax is proposed to be levied on all the hospitals , including a 25-bedded private hospital and a super-speciality hospital like Apollo or Continental. All the patients who seek special rooms besides those accessing air-conditioned and television facilities, will fall under this category.

HC has put a stay order till Feb 15. Even though a final solution has not been reached, the THANA members have since protested the move, as they feel that such a harsh financial decision will force many hospitals to shut down. Others will be forced to raise the cost of treating all infectious diseases.

As further implied by Dr B Narender Reddy, city president-elect of THANA, Hyderabad, this is an irrational move, making even the basic treatment for infectious diseases like swine flu, TB, chicken pox, measles are expensive, since they are required to be kept in isolated rooms.

The tax was be imposed through G.Os 145 and 146 issued by CDT dated August, 2015 by adopting the existing AP Tax on Luxuries Act, 1987.

As reported by TOI, The relief – which will continue till February 15 – was issued following a writ petition moved by THANA state president Dr D Narayan Rao against the Telangana Commercial Taxes department (CDT), weeks after hundreds of private hospitals in the state were startled when notices issued by the CDT asking them to pay up 10% luxury tax retrospectively from June 2, 2014.

“Since, the luxury tax would also be applicable on those patients covered under Aarogyasri health scheme and Employees Health Scheme, entirely funded by the state, the government would have to increase the tariff rates being offered to private empanelled hospitals,” said Dr Narayan Rao, while vowing to fight the rule tooth and nail.

In fact, the THANA members – who have even threatened to go on strike if the new rule is not revoked – wondered why the state government thought of bringing even small and medium-sized private hospitals under the luxury tax dragnet.

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    Source: with inputs from TOI

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