New Delhi, March 22
Patients seeking private medical care will no longer be burdened with the additional 5 per cent service tax which Finance Minister Pranab Mukherjee had earlier announced in his General Budget speech.

Cornered from all quarters, the minister, while moving the Finance Bill (which was later passed) in the Lok Sabha today, withdrew the tax from both the medical treatment and diagnostic services available in air-conditioned facilities with 25 or more beds.

Sigh of relief n Coking coal used in manufacture of iron and steel exempted from customs duty n Concessional rate of 5% CVD and nil Special Additional Duty extended to parts of computer printers imported by actual users n Proposal to extend 18.5% Minimum Alternate Tax on SEZ developers & units retained n Basic customs duty on raw silk reduced from 35 to 5% to augment supply to weavers

“The new healthcare levy was meant not just to mobilise revenue but also to prepare ground for the introduction of the Goods and Services Tax. But I have decided to exempt the new levy in its entirety both on services provided by hospitals and diagnostic tests until the GST comes into force,” Mukherjee said in the House today, inviting a thunderous applause.

The move follows criticism of the tax proposal from the civil society and medical fraternity, with top cardiac surgeon Dr Devi Shetty, also member of the Medical Council of India’s Board of Governors, slamming the service tax as “Misery tax” and seeking its withdrawal.

In an open letter to the FM, Shetty said less than 10 per cent of India’s population could afford heart, brain or cancer surgery. “The 5 per cent service tax means if you undergo a heart operation for Rs 1 lakh, you must pay Rs 5,000 more as service tax. If you undergo a cancer surgery and radiotherapy, you must pay another Rs 20,000. This tax is a misery tax,” he had said.

The IMA denounced the proposal, explaining that it would break the back of private healthcare providers considering no surgery can be performed without air-conditioned OTs and legally, no blood bank can get licenses if they don’t have ACs.

The FM also allayed the concerns rising from the 10 per cent excise levy he announced earlier on branded readymade garments. Today, he raised the abatement available for the levy of taxes on retail price of branded garments from 40 to 55 per cent.

“With this relief, a unit will continue to be eligible for Small Scale Industry exemption in 2011-12 even if it had a turnover based on retail sale price of Rs 8.9 crore in the current year,” Mukherjee said. The tax doesn’t apply to unbranded garments. Under the new norms, 10 per cent excise would be levied on 45 per cent of the tariff value of retail price on branded readymade garments as against 60 per cent proposed in the proposal.