Radiology will be affected by GST on three counts

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Increasing the tax on purchases critical to the industry will negatively impact the already stressed bottom-lines of healthcare.

Radiology and imaging, along with in-vitro diagnostics, form the backbone of any healthcare system since prudently performed diagnostic tests lead to accurate treatment. Not only does this lead to improved clinical outcomes for patients, but it also leads to lower healthcare expenditure in the long run since patients are given only the best, most appropriate treatment.

Unfortunately, the GST rates on healthcare equipment and allied items are sending the opposite signal. There has been an increase in almost all indirect taxes that a healthcare provider will have to pay. Radiology, specifically, will be affected on three counts. First, there is an increase in tax on import of medical equipment to the tune of five per cent. While this is in line with the government’s plan to promote manufacturing in India, high-end equipment like MRI scanners, CT scanners etc., it will take a long time to be developed and manufactured in India and this increase in tax is instead de-incentivise healthcare providers from bringing in cutting-edge equipment. Secondly, there is an increase in effective tax rate of 10 per cent on comprehensive maintenance contracts which are critical for maintaining all equipment and ensuring high quality diagnostics. Lastly, there is a general increase in effective tax on most consumable purchases made by healthcare providers such as spare parts, catheters, needles, pumps and even diagnostic kits.

It is important to realise that the healthcare industry is already under tremendous price pressure, and increasing the tax on purchases critical to the industry will only further negatively impact the already stressed bottom-lines of healthcare. Also, it is important to note that passing-through the impact of increased taxes onto patients is extremely difficult and might even be considered wrong by many. In an era when we need our country’s brightest and best to come into the healthcare sector, is this really the right approach?

Dr Vidur Mahajan, Associate Director, Mahajan Imaging

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