ISLAMABAD: Hospitals in Pakistan, especially those running on donations/charities have suffered the big setback due to levy of sales tax on supplies to hospitals affecting the operational cost of a hospital and medical treatment.
A tax expert from Karachi explained to Business Recorder the anomaly arises out of the levy of sales tax on supplies to hospitals providing treatment to the underprivileged class of the country.
The omission of entry # 52-A from the sixth schedule of the Sales Tax Act, 1990, has changed the entire landscape of the hospital sector, whose supplies are slapped with the levy of sales tax.
Needless to mention the levy of sales tax on supplies to hospitals could severely affect the operational cost of a hospital and medical treatment.
One of the serious anomalies that arise after the omission of entry # 52-A from the Sixth Schedule of the Sales Tax Act, 1990 through the Finance (supplementary) Act, 2022.
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The relevant entry pertained to the exemption of sale tax on supplies to hospitals run by the federal or provincial government or charitable hospitals of 50 beds or more or the teaching hospitals of statutory universities of 200 or more beds.
By virtue of this entry, the essential supplies to the hospitals including equipment’s, consumables like syringes, needles, sutures, staples, packaging, tubing, catheters, medical glove, gowns, masks, adhesives, x-ray films, stores/parts, and a whole host of other devices and tools used with a hospital or surgical environments have become chargeable to sales tax at the standard rate of 17 percent along with further sales tax at the rate of three percent.
The experts understand that the government and the FBR have no intent to increase the cost of medical treatment in Pakistan. In a similar manner, the amendment to the pharma sector was brought in the better interest of the common man and to protect the health and pharma sector; therefore, exemption of sales tax was replaced with zero-rating.
The government, while adequately protecting the pharma sector seems to overlook to protect the health sector from the impact of the sales tax on supplies of essential equipment, consumables, and a whole host of other devices and tools.
He highlighted that the understanding of the government’s policy is strengthened by the FBR’s circular no 06 of2022 dated 22 January 2022 explaining amendment brought into Finance Supplementary Act, 2022.
According to the circular, one and foremost objective of the changed regime of the sales tax on pharmaceutical sectors is to help the government in controlling and reducing the price of pharmaceutical goods.
This government has a prime manifesto of providing basic social rights including the right to education, health, eradication of poverty, and security, is doing all out efforts to improve the basic necessities of the common man through different socially-motivated projects.
It could not be the objective of this government to increase the cost of basic medication and hospitalization for an underprivileged class of the country. However, the omission of entry # 52-A from the sixth schedule of the STA 1990, has changed the entire landscape of the hospital sector whose supplies are slapped with the levy of sales tax. Needless to mention the levy of sales tax on supplies to hospitals could severely affect the operational cost of a hospital and medical treatment.
There are no two opinions, that health plays a key role in determining human capital. Better health improves the efficiency and the productivity of the labor force, ultimately contributes the economic growth, and leads to human welfare. To attain better, more skillful, efficient, and productive human capital resources, governments subsidise the health care facilities for their people.
In our country also in spite of limited resources and a high debt economy, this government has made efforts to allocate the highest budget in history to the health sectors.
The private sector has also played an instrumental role and has significant contribution to the national cause. The private sector serves approximately 70 percent of the population in our country and consistently outperforms its public counterparts, as measured by the overall quality of healthcare and patient satisfaction. A significant part of the private sector health care contribution in Pakistan is based on funding through donations, Zakat, and charity. Institute like Shaukat Khanum Hospital, Indus Hospital, S.I.U.T., L.R.B.T., Kidney Centre are some of the widely-recognised names.
Copyright Business Recorder, 2022
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