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Anna Uncle, a retired clerk, is fully dependent on his past savings and pension income for his old age expenses and living. Anna Uncle is little worried these days as someone in the market told him that he will have to shell out 10.3 % extra for his medical treatment. They were talking about some service tax on nursing home and hospitals. Anna Uncle, as any other elder man is suffering from old age ailments. Anna uncle visits nearby nursing home for his regular check up and medical treatment. Anna uncle, being simple man with restricted educational background, could not understand what they were talking about at market, but he is little worried about whole thing. Friends, lets analyse, whether Anna uncle should really worry? The Government has made amendment in the service tax laws, wherein the government has levied service tax on health service from 1st July 2010. Service tax will be levied where any hospital, nursing home or multi-speciality clinic provides medical service to:
- to an employee of any business entity, in relation to health check-up or preventive care, where the payment for such check-up or preventive care is made by such business entity directly to such hospital, nursing home or multi-speciality clinic; or
- to a person covered by health insurance scheme, for any health check-up or treatment, where the payment for such check-up or treatment is made by the insurance company to such hospital, nursing home or multi-speciality clinic.
Thus, from above, we can conclude that, service tax would be payable under this category only if and to the extent the payment for such medical check up or treatment etc is made directly by the business entity or insurance company to the hospital or medical establishment. Further, an amount paid by the individual to the hospital would not be subjected to service tax. This is to ensure that an individual is not required to pay a tax for which he cannot take credit. Hence health service is not required to charge tax on the amount paid by an individual.