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ISLAMABAD: The federal government has restored the exemption of general sales tax on local supplies to charitable hospitals through an amendment in the sixth schedule of the Sales Tax Act, 1990 under the proposed finance bill 2022.

Commenting on the proposed Finance Bill, Arshad Shehzad, an expert explained, that the previous government has withdrawn the exemption and slapped sales tax at the rate of 17 per cent by omitting entry number 52-A from the Sixth Schedule of the Sales Tax Act, 1990 through the Finance (Supplementary) Act, 2022.

The relevant entry pertained to the exemption of sales 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.

Private hospitals, NGOs, charities not having STRNs: FBR to charge 3pc more sales tax

By virtue of this entry, the essential supplies to the hospitals include equipment, 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 per cent along with further sales tax at the rate of three per cent.

Shehzad said the civil society and representatives of the health sector were continuously pursuing the government to revisit this decision. Health plays a key role in determining human capital. Better health improves the efficiency and productivity of the labour force, ultimately contributes the economic growth, and leads to human welfare. To attain better, more skilful, efficient, and productive human capital resources, governments subsidize the healthcare facilities for their people.

In this budget in spite of limited resources, economic pressures, and a very short span of budget preparation time, this government has taken a commendable step to restore the sales tax exemption for the healthcare sector.

Shehzad lauded this move and says this is one of the significant relief measures as a significant part of the private sector healthcare contribution in Pakistan is based on funding through donations, Zakat, and charity. Institutes such as Shaukat Khanum Hospital, Indus Hospital, S.I.U.T., L.R.B.T., and Kidney Centre are some of the world’s widely-recognized names and the removal of sales tax on their supplies will ease the healthcare cost on the general public which was already increased due to vulnerable rupee-dollar parity, Shehzad concluded.

Copyright Business Recorder, 2022

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