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Luxury tax on ICU’s withdrawn by Karnataka govt

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Bengaluru: Following criticism from different quarters with regard to the luxury tax being imposed on Intensive Care Units (ICUs) in private hospitals, the state government on Wednesday decided to withdraw it.

Speaking to the media, Chief Minister Siddaramaiah said a section of private hospitals had recently urged the government to exempt ICUs from paying luxury tax as it would burden the patients. Further, patients had objected to the imposition of the tax. “After looking into the issue, the government has decided not to impose luxury tax on ICUs in private hospitals,” Siddaramaiah said.

An order stating that accommodation provided in ICUs charging more than Rs 1,000 per day per room in private hospitals would attract eight per cent luxury tax under Karnataka Tax on Luxuries Act, 1979 was issued by the Commercial Taxes department on July 2, 2015. The department initially had not insisted on the tax. However, with the financial year ending in two months and its budgetary target to be met, the department recently issued a directive to all private hospitals that the tax needs to be imposed.

“Charges collected for luxuries provided in a room of a hospital such as accommodation, air-conditioning, telephone, television, radio, music, extra beds and the like where such charges are more than Rs 1,000 per day per room attract luxury tax. Since accommodation provided in an ICU amounts to providing accommodation in a room of a hospital, luxury tax becomes leviable, provided the charges per day per room is more than Rs 1,000,” the order stated.

The department had issued the order following a petition by Director of Agrawal Seva Samiti Dr Satish Kumar Jain, seeking clarification whether luxury tax was applicable for the accommodation and air-conditioning provided in ICU and ICCU of a hospital.

Dr H Sudharshan Ballal, medical director, Manipal Hospitals said, “In my opinion, it is highly inappropriate to even call ICU treatment as a ‘luxury’. Luxury is something you do to pamper yourself. ICU is the most critical part of a hospital stay. I am happy that the decision was re-considered.”

Dr Devi Shetty, chairman and founder, Narayana Health said, “To recall the tax is a most dignified and responsible stand that the government has taken. In the first place, the government is unable to provide enough when it comes to critical care and now wanted to intervene when the patients go elsewhere.”

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