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Budget 2016-17 Reflections

Budget 2016-17 Reflections

New Delhi: Though the Budget for 2016 presented by the Finance Minister, Mr. Arun Jaitley, is to be looked at positively for its extension of healthcare benefits to the masses with its new insurance scheme, affordable kidney treatment and a 10 % tax  deduction on   patents developed in India, there exist  lacunae that need to be looked into.

Taking up the pharmaceutical division of Health Care  one finds the minister’s budgetary allocations  wanting in nature. The government’s announcement to lower tax benefits on research and development is a bit worrisome according to the pharma industry. The major setback in the budget is  withdrawal of tax deduction on research and development expenses.

Presently companies enjoy a tax benefit of 200% on research expenses , however, the government has decided to reduce the deduction to  150% in April next year and 100% by the year 2020. The reduction in tax exemption implies an increase in tax rate for pharma companies. Some private companies spend 12 % on research and development.

The Finance Minister, Arun Jaitley,has  proposed a ten per cent tax rate on income from patents developed and registered in India; the  area of concern for the pharma industry remains  the total lack of concern by the government to address the issue of recent increase in import duty on medical equipment and devices. Since the  medical technology sector is in the stage of  infancy  with manufacturing limited to less complex devices, more than 75% of medical equipment / devices are   imported and therefore, healthcare costs would rise with an increase in  duty. The government also needs to pursue its proposal to establish a separate ministry for pharmaceuticals to end the current confusion and chaos in the sector due to multi-ministerial control.

Ensuring  that the health protection scheme acts as a catalyst for investment in the healthcare sector, thereby,  improving access & affordability of quality healthcare, is another area that the government needs to ponder upon.

In the R & D and medical education sector of  healthcare there is need  to work out ways to prevent brain drain to tier-I cities and other countries in pursuit of specialised education  and career opportunities in nursing, pharma, physiotherapy, paramedical sciences. This could be done  by increasing budget allocation to modernise medical education.

Tax SOP’s for units focusing on R&D and an improvement in patent laws also need to be looked into.





Source: Self
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