Luxury Tax on Hospital rooms charging more than Rs 1000 per day: Kerala HC Decision

Kerala: Hospital rooms costing over Rs 1000 per day are soon going to attract luxury taxes. Kerala High court was recently seem upholding the said decision of the state government,thus sealing the fate for most of healthcare facilities as majority hospitals in the state have room charges exceeding Rs 1000 per day.

The judgement has come against an appeal filed by  Rajah Healthy Acres Pvt Ltd, which operates a hospital in Kochi. The appeal challenged the state government's decision to levy luxury tax on hospital rooms that cost more than Rs 1,000 per day. The state government had incorporated amendments in the Kerala Tax on Luxuries Act, 1976 making it mandatory for hospital having not less than five rooms for accommodation of patients and which charge Rs 1,000 and above per room, excluding the charges for medicine, food and professional services, to be eligible to pay luxury tax

The impugned amendments to the Act define luxury provided in a hospital under Section 2(fb) as “accommodation for residence for use of amenities and services provided in a hospital, the rate of charges of which, excluding charges of food, medicine and professional services, is one thousand rupees per day or more''

The appeal had contended that Rs 1,000 is very meagre and would not qualify as a luxury given the nature of work at hospitals and thus this decision should be struck down. However, the court dismissing the appeal pointed out that it cannot interfere with the limit set by the legislature which is based on the relevant social and economic parameters of the people of the state.