Stung by the “misery tax” remark by the healthcare industry and in deference to widespread criticism in and outside Parliament, Union Finance Minister Pranab Mukherjee on Tuesday withdrew the five per cent service tax on hospitals and diagnostic centres. He also gave excise duty relief on branded garments to small-scale industries and announced marginal tax concessions for some other sectors.
In his reply to the debate on the Finance Bill 2011-12 — which was later approved by voice vote in the absence of the main Opposition Bharatiya Janata Party as it walked out when the Bill was moved for consideration — Mr. Mukherjee chose to modify some other tax proposals relating to dividend tax, personal computers, printers, mobile phones and auto parts.
With this, the three-stage budgetary exercise stands completed in the Lok Sabha, and the Finance Bill is to be taken up by the Rajya Sabha for final approval.
Earlier, announcing the rollback of the much-criticised levy on hospitals while moving the Bill for approval, Mr. Mukherjee said: “The proposed levy on health care has raised considerable anxiety in this House and outside. The purpose of the levy was not merely to mobilise revenue; it was to pave the way for the introduction of the Goods and Services Tax (GST). However, I have decided to withdraw the new levy in its entirety, both in respect of services provided by hospitals and by way of diagnostic tests until the GST comes into force.”
While the withdrawal of the service tax on centrally air-conditioned hospitals (having more than 25 beds) and diagnostic centres was welcomed by the treasury benches and the Opposition, Mr. Mukherjee hoped that it would not be called a “misery tax” any more.
Mr. Mukherjee also announced exemption of coking coal from customs duty when used in the production of iron and steel, and reduction in the import levy on completely knocked down kits for re-assembled engine and gear-box or transmission assembly for manufacture of vehicles to provide relief to the auto sector.