The government has imposed a 17 percent sales tax on supplies to hospitals, severely affecting the operational cost of hospitals and medical treatment.
A presentation by the leading hospitals to the Federal Board of Revenue (FBR) Chairman revealed that the omission of entry number 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. 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 is due to the omission of entry number 52-A from the Sixth Schedule of the Sales Tax Act, 1990 through Finance (Supplementary) Act 2022. The relevant entry pertained to the exemption of sale tax on supplies to hospitals run by the federal or provincial governments or charitable hospitals of 50 beds or more or teaching hospitals of statutory universities of 200 or more beds.
By virtue of this entry, the hospitals’ representatives said, the essential supplies to the hospitals including equipment, consumables like syringes, needles, sutures, staples, packaging, tubing, catheters, medical glove, gowns, masks, adhesives, x-ray films, stores/parts, and other devices and tools used in hospitals 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.
According to the hospitals’ representatives, the private sector serves approximately 70 percent of the population in Pakistan and consistently outperforms its public counterparts, as measured by the overall quality of healthcare and patient satisfaction. A significant part of the private sector healthcare contribution in Pakistan is based on funding through donations, zakat, and charity. While omitting entry number 52-A of the Sixth Schedule, this devastating implication on the healthcare system was somehow overlooked.
The leading hospitals, therefore, requested taking appropriate and curative measures to restore the position prevailing prior to the referred amendment to protect the basic rights of the healthcare sector.
The hospitals’ representatives were of the view that the hospitals being health service providers for the sales tax purpose are falling under the jurisdiction of provincial sales tax authorities and are not liable to be registered since the health services are not liable to sales tax in any of the provincial sales tax statutes. Therefore, the levy and payment of sales tax on supplies of equipment and consumables neither can be adjusted nor refunded and thus will absorb in cost price, they argued.
Source: Pro Pakistani