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Healthcare sector should be accorded National Priority status: NATHEALTH


Healthcare sector should be accorded National Priority status: NATHEALTH

India continues to rank low on many of the basic health indicators. Apart from trailing developed nations, India compares un-favorably even with its economic peers, other Asian countries and many of its neighbors. In order to bridge the infrastructure gap that currently exists in the country and ensure greater access to healthcare, Apex healthcare body-NATHEALTH has recommended that healthcare sector needs to be accorded ‘National Priority’ status.

In its Pre-Budget recommendation, recently submitted to the government, NATHEALTH said, though healthcare was included in the harmonized master List of Infrastructure sub-sectors by the Reserve Bank of India in 2012, long term financing options are still not available for healthcare providers.

According a “Priority Sector” status to healthcare will help in the process of enabling development of innovative long term financing structures for healthcare providers apart from creating an attractive environment for domestic production of medical equipment, devices and consumables while also catalyzing research and development. This will channelize funds from the banking sector to creating necessary healthcare infrastructure and meet societal objectives of the Government of India.

NATHEALTH has also emphasized that there is urgent need for setting up a health infrastructure fund and a medical innovation fund.

“Access to funding by creating a specific fund for healthcare infrastructure and innovation would facilitate access to capital for the industry. These funds would encourage entrepreneurship and newer business models which are the need of the hour for improving access, availability and quality, especially in Tier 2, Tier 3 and rural areas. The Government can think of providing seed capital for such a fund”, Anjan Bose, Secretary General, NATHEALTH elaborated.

The Healthcare body has also urged that the Government could also explore making health insurance coverage mandatory for all citizens in a phased manner initially covering the organized sector. Employees could be given the option of either paying their ESI contribution or purchasing insurance from any IRDA regulated insurance company.

“Apart from enabling universal access to healthcare, the mandatory health insurance coverage would also meet the urgent need for augmenting healthcare capacity creation in the country”, Bose added.

According to NATHEALTH, there is also a need to increase in quantum of deduction towards payment of medical insurance premium. The Pre-Budget memorandum said, “The present annual deduction limit of Rs 15,000 needs to be enhanced to Rs 50,000 for self and family and the current annual limit of Rs 20,000 in respect of dependent parents needs to be enhanced to Rs 50,000.”

Other Recommendations 

  1. Need for extending the 150% weighted deduction scheme under section 35ad of the income tax act, 1961 for another 5 years upto 2022
  2. Provide import duty relief in respect of lifesaving equipment, not manufactured in India and enable a robust regulatory framework for domestically manufactured medical devices.
  3. Further simplification of the tax regime in respect of real estate investment trusts (reits)/business trust
  4. Earnings from medical tourism to be made tax exempt
  5. Need for a liberalized FDI regime in respect of investments relating to medical education
  6. Exempting the healthcare sector from the mat regime under the income tax act
  7. Inclusion of hospital as an industrial undertaking under section 72a of the income tax act
  8. Lowering of corporate tax rates as announced in the union budget 2014-15
  9. Abolishment of dividend distribution tax
  10. Need for revision in the service exports from India scheme (seis) reward rate
  11. Need for providing a longer term (10 year window) for 250% deduction of approved expenditure on R & D activities
  12. Extension of the duration of the tax holiday scheme from 5 years to 10 years for new hospitals
  13. Enhancement in medical reimbursement exemption limit for salaried employees to rs 1 lakh per annum in line with cost inflation index
  14. Introduction of a separate deduction in respect of preventive health checks
  15. Introduction of a deduction for investment into long term bonds with a minimum tenor of 10 years issued for setting up hospitals with at least 100 beds
  16. Introduction of an insurance policy for elders (aged 55 and above) to cover specific health risks arising from vulnerabilities of old age
  17. Instituting a healthcare savings fund for all salaried employees similar to the pf scheme which would be tax deductible
  18. Allowing Corporate Social Responsibility (CSR) spends as tax deductible business expenditure



Source: Press Release
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