A performance audit of India’s private hospitals has revealed that a majority of the institutions is evading tax. The report by the Comptroller and Auditor General (CAG), released on Friday, pointed out that data on ‘non-filers’ of income tax was available only in three states — West Bengal, Assam and Gujarat.
The auditors found that Delhi, Kerala, Rajasthan and Tamil Nadu had no process of identifying hospitals that were evading tax.
“The detailed list of non-filers along with action taken thereof could be furnished in respect of West Bengal, Assam and Gujarat only, where out of 18,333 cases, Income-Tax Department had closed 3,627 cases and the remaining 14,706 cases were “under verification/action pending” or were yet to be closed. Audit found that no such process of identification on non-filers through a monitoring system existed in Delhi, Kerala, Rajasthan and Tamil Nadu,” the audit said.
The private sector accounts for 80% of out patient care and 60% of in patient care in the country. According to State-wide data from the Department of Industrial Policy and Promotion (DIPP), the health sector attracted Foreign Direct Investment of ₹23, 169.91 crore between April 2000 and September 2016. Yet, the report states that most private hospitals and practitioners did not submit valid Permanent Account Numbers (PAN).
In West Bengal, out of 19,822 registered practitioners, PAN registration of only 4,849 cases could be traced. “The remaining 14,973 cases were again referred to the department for reconfirmation of their existence in the tax net,” says the CAG report.
Unjustified exemptions
In Maharashtra, a study of charitable hospitals — that avail a tax exemption — found that private hospitals availed “unjustified exemptions” amounting to ₹249.66 crore involving a revenue impact of ₹77.14 crore.
On the basis of data from Charity Commissioner in Mumbai, the CAG analysed 10 trust hospitals and found that none of them fulfilled the conditions of Bombay Public Trust Act. “Bed occupancy in eight out of 10 hospitals was less than the mandated 10% for weaker sections of society. Only 0.41-2.79% of the patients treated actually belonged to weaker sections of society as against the stipulated 10 per cent,” the report added.
