Commercial tax dept is determined to make hospitals fall in line, all for barely Rs 20cr p.a.

The state government has imposed an eight per cent luxury tax on each bed in an ICU. Last week, the department of commercial taxes sent a directive to all hospitals across the city stating: "The accommodation provided in an ICU charging more than Rs 1,000 per day per room attracts luxury tax at the rate of eight per cent under the Karnataka Tax on Luxuries Act, 1979." What the directive means 'per room' is per bed. The hospitals without doubt will pass on the burden to the patient.

The daily rate in an ICU in a private hospital usually ranges from a minimum of Rs 2,500 to as much as Rs 5,000+. So the daily burden on the patient and family would go up in the range of Rs 200 to Rs 400. A copy of the order was signed by commercial tax commissioner Ritvik Pandey six months ago but is being strictly put into effect now.

The commercial taxes department has, however, justified its action, stating it is in sync with the rule book. A senior official said: "This is in continuation of the existing order that prescribes imposition of luxury tax on deluxe and super-deluxe rooms of hospitals. The hospitals collect more money from patients on the pretext of providing various facilities in these rooms and it is natural that these have to be taxed."

A reputed oncologist, who did not want to be named, said: "How can the government treat an ICU as a hotel room or a private ward in a corporate hospital? The patient in an ICU is usually battling for life and not wallowing in comfort. How can we tell the family members of the patients to pay luxury tax when they are actually hoping for a miracle? This order is nothing short of a state-administered euthanasia programme!"

The department's order also cites Section 3-E of the Karnataka Tax on Luxuries Act which highlights luxury provided in hospitals through amenities such as air-conditioning systems, telephone, television sets, radio music, beds and extra beds — and where such charges are more than Rs 1,000 per day per room. The department has stated in the order: "Since accommodation provided in an ICU amounts to providing accommodation in a room of a hospital, luxury tax at the rate of eight per cent becomes leviable provided the charges per day per room is more than Rs 1,000." The entire exercise is expected to raise barely Rs 20 crore for the exchequer.

BECAUSE I AM A TAXMAN

As per sub-section (1-C) of Section 2 "Charges for luxuries provided in a hospital" is defined to mean charges for accommodation provided in a hospital for a patient and his attendant including charges for air-conditioning, telephone, telephone calls, television, radio, music, extra beds and the like. Tax at the rate of eight per cent on such charges can be collected (provided such charges are more than `1,000 per day per room). The same is applicable to ICUs.

HOSPITAL RATE CARD

Here is what top corporate hospitals in the city charge for ICU:

Apollo Hospital, Bannerghatta Road : Rs 5,200 + Rs 5,012 (ventilator)

Manipal Hospital, Old Airport Road : Rs 7,000 + Rs 3,600 (ventilator)

Columbia Asia Hospital, Yeshwanthpur : Rs 5,200 + Rs 5,000 (ventilator)

Fortis Hospital, Bannerghatta Road : Rs 7,500 + Rs4,000 (ventilator)

Sagar Hospital, Banashankari: Rs 5,500 + Rs 3,500 (ventilator)

ARE YOU KIDDING, ASK DOCS

The rule came into place about six months ago says that luxury tax will be applied to any room with an AC. But the rules of the NABH clearly state that AC is necessary in ICUs to prevent cross infections. Already the charges for an ICU are extremely high (`2,500 per day without ventilator and `3,500 with ventilator). This is mainly because the nurse-patient ratio is 1:1. This excludes the cost of medicines. The burden will be on the patient. We have given a representation to the government but they did not consider it. — Dr Alexander Thomas, executive director, AHPI

Although the representation came a few months ago, all these days not all the tax inspectors were enforcing it; but lately, many hospitals have been pulled up for this. The government should be a little considerate here because the patient does not get admitted to the hospital seeking luxury. Levying a luxury tax on somebody who is fighting a life-threatening disease is very illogical. We as an association are planning to meet tax inspectors — Dr Nagendra Swamy, president, Private Hospitals and Nursing Homes association.

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