Do charitable hospitals deserve tax benefits?

Debate

‘All tax benefits should be withdrawn’

Ravi Duggal

Under the Public Trust Act, hospitals registered as trust hospitals are supposed to provide free care to upto 20 per cent of their admissions, OPD and other services and for this, they are exempted from the income tax. All these years, most of the charitable trust hospitals taken the State for a royal ride by not complying with this provision of the Act.

The charity commissioner, to whom they are accountable, has also not audited the functioning of these hospitals to find out whether the social benefit of free care for the poor is being provided, in lieu of the tax benefits the hospitals get.

For octroi exemption, similar benefit clauses are there. If hospitals do not honour the social commitment as per the Public Trust Act then, there is no reason for them to get any tax benefits.

In fact, the income tax authorities too need to review the tax exemptions by conducting audit for the provision of free care.

When the Maharashtra government, sometime back, raised this question of 20 per cent free care under pressure from NGO’s and activists, and demanded that the 20 per cent free care could be referrals from government hospitals, the hospital lobby went to court and got a stay order.

With such an attitude on part of these ‘so called’ charitable hospitals, all tax benefits should be withdrawn. Hence, the BMC was right in withdrawing the octroi tax exemption given to the trust hospitals in the city.

The concessional patients are usually bureaucrats, politicians, acquaintances of doctors and hospital staff or at the most, some rebate in charges is given to the members of the community by whom the hospital was set up. Let us first have transparency about concessions as per the law, which should be made public information, and then tax concessions should be given.

(Duggal is co-ordinator of the NGO-Centre for Enquiry into Health and Allied Themes. Email:raviduggal@vsnl.com)

Anupam Verma

The trust hospitals are basically philanthropic organisations. They work as ‘not for profit’ organisations and their main objective is, to help the government in providing medical care to the public. They assist the government, with the sole purpose of providing health care at minimal costs. The hospitals are not provided with any funds or subsidies from the government, to enable them to provide the care that is required for those in need.

Although the exemption on octroi provided only around 5 per cent relief on the actual cost of the imported facilities, such exemptions, including the income tax exemption, is well deserved by the trust hospitals. The surplus margins enjoyed by the hospitals are too less, considering the high costs incurred on the high quality treatments offered. The cost vs price ratio is very high in the treatments offered, and any rise in the cost would mean an increase in the price which will be paid by the patients, for the treatment. The trust hospitals have come to the government’s rescue in ensuring the provision of good health care to the people. It is unfair on the part of the government to want to earn a revenue out of the services offered by these hospitals. The exemptions given by the government in income tax and the other taxes are passed on to the patients in terms of reduced treatment costs.

The Jeevandayi scheme, proposed by the government, includes providing free treatment to patients referred to the trust hospitals from the government hospitals, with the government paying about Rs 50,000 to the hospital for the treatment.

It was strongly opposed because, the patients who were referred came in cars with mobiles in their hands and to add to it, the government blatantly refused to give the assured amount to the hospitals.

The percentage of people getting free treatment in the trust hospitals is much more than the percentage required in the proposal and thus, the exemptions are well deserved by the hospitals. Their withdrawal will affect the patients in terms of the price paid by them for the services only. The free treatments will continue to be offered to those in need, but the concession given may have to be reduced, if the exemptions are withdrawn.

(Verma is head, operations, Hinduja Hospital, Mumbai. Email:anupam@hindujahospital.com)