As India awaits the unveiling of the interim Union Budget 2024, the healthcare, wellness, and pharmaceutical sectors are vouching for a revised tax deduction rate on medical claims to alleviate cash flow pressures on healthcare providers.
Read the expectations in detail:
Dhiraj Jain, Founder & Chairman of Redcliffe Labs
We congratulate the government in power for the third consecutive time.” It is good to observe India progressing under their leadership, and hopefully, we will see a developed Bharat by 2047, which is the dream of every Indian now. As a contributor to the healthcare sector, I look forward to the Indian Union Budget’s strong commitment to transforming it, with accessibility and affordability at its core.
India’s healthcare sector had a remarkable year in 2023, with significant mergers and acquisitions, consolidation, significant private equity investments, a notable upswing in stock prices, and improved financial performance. This growth, culminating in a valuation of $372 billion, was not solely the result of the private sector’s dynamism but also the government’s strategic initiative, which played a crucial role in the sector’s triumph. This success story should serve as a compelling case for further investment and commitment in the healthcare sector, highlighting the government’s significant influence on the sector’s success.
Looking ahead to the post-pandemic era, it is crucial to bolster the economy by strengthening and preparing the healthcare infrastructure. This is not just a matter of ensuring people have improved access to quality and critical healthcare services, but also a strategic move to secure a brighter future.
The Union Budget 2023-2024, with its potential to ignite innovation, drive R&D, and boost healthcare expenditures, could be a pivotal investment into future human capital, which will be the foundation for an efficient and resilient healthcare sector. The urgency and necessity of this investment are paramount and cannot be overstated. Also, it is a request to the government, and all the stakeholders in the healthcare sector would agree that there should be zero-rating GST on healthcare services.
Implementing this change will further ensure eligibility for input tax credits and also help to reduce the cost of essential services. Healthcare providers can pass the services to patients at lower prices leading to better health outcomes for the underserved. This will help in expanding the services to Tier 2 and Tier 3 cities apart from urban areas, and most importantly shift the focus of the public from curative care to preventive care which is necessary for a Healthier Bharat.
Prabhat Srivastava, Co-Founder and Director, VitusCare Medlife
Currently, the Tax deduction rate of medical claims being reimbursed under PMJAY and other government panels is 10% under section 194J. looking into the fact that medical services are not purely professional services and include the usage of expensive consumables and reimbursement by panels includes the cost of consumables also which is generally 40-50% of the total claimed amount, deducting 10% income tax at source by reimbursing agency on entire reimbursement puts hospitals and Healthcare service providers in adverse cash flow situation.
The Ministry of Finance and CBDT are requested to look into the same and have a special rate of TDS( 1-2%) for the healthcare sector to ease out the cash flow situation. The healthcare sector is exempted from GST, however, that has an adverse implication that the entire GST paid is a cost for hospitals and medical establishments and puts the entire sector at a disproportionate disadvantage, we request govt to allow some proportion of GST input credit as refund or allow a nominal GST (1-2%) on all healthcare services, so that medical establishments can take advantage of input GST credit.
Shashank Avadhani Co-founder & CEO, of Alyve Health, said
Alyve Health is keenly awaiting the upcoming budget to be presented by Finance Minister Nirmala Sitharaman. We urge the budget to prioritize the healthcare sector, specifically focusing on preventive healthcare initiatives. While the health budget has increased 12% to ₹86,175 crore in 2023-24, there is a significant disparity in healthcare services available in rural and urban India.
Moreover, the rise in outpatient care costs, especially for lifestyle diseases such as diabetes, heart disease, and cancer, is straining the healthcare system. It makes a case for lifestyle management and preventive healthcare initiatives.
At Alyve Health, we’re proud to provide innovative health plans for individuals, groups, and corporate employees. Our diverse range of plans is designed to help people stay healthy and foster healthy living habits, demonstrating our commitment to preventive healthcare. Given India’s vast population, prioritizing preventive healthcare is essential. It can significantly reduce the burden on the existing healthcare infrastructure. Alyve Health believes investing in preventive healthcare and incentivizing startups that bring innovative solutions in this space is the right way. As a company that offers customized health plans, we at Alyve Health hope the upcoming budget provides incentives for the preventive healthcare sector in India.
Himanshu Chandel, Associate, Spice Route Legal
With the 2024-2025 interim budget showing a 13.8% increase in healthcare and pharmaceutical allocations, we can likely expect this trend to continue. This boost means more financial support for crucial areas like research and development, infrastructure improvements, and accessibility initiatives. The extra funding will not only enhance domestic research but also help establish world-class health infrastructure and promote exports. There should be a focus on increasing allocations for centrally sponsored schemes and initiatives by the Department of Health and Family Welfare.
The finance minister mentioned the formation of a separate committee to aid in implementation, which is a promising step. Optimizing the regulatory framework through the new Drugs and Cosmetics Bill should further enhance India’s position in the pharmaceutical sector. The continued increase in budget allocations is great news for advancing the domestic healthcare system, and boosting the global standing of India’s pharmaceutical industry.”
Anish Bafna, CEO & MD, Healthium Medtech
The Union Budget 2024-25 presents policymakers with a unique opportunity to bolster India’s healthcare ecosystem, improve accessibility, and focus on strengthening preventive healthcare.
With India embarking on its journey of Viksit Bharat 2047, the budget needs to prioritize the healthcare infrastructure along with a higher allocation to healthcare spending. Offering incentives for innovation and skill development will set the course for a competitive healthcare landscape. The country entails a promising financial outlay for the sector to encourage collaboration, continue upskilling of healthcare practitioners, detect diseases early, and eventually improve patient outcomes.
As we look forward to charter the next phase of growth in the medtech industry, it is crucial to underscore the roadmap for a collaborative action plan. The industry echoes a shared sentiment for the need to increase the overall budget allocation towards healthcare.
Domestic manufacturers will continue to seek an increase in duty incentives up to 5% under the current RoDTEP scheme. Reintroducing of the benefit for claiming the 200% of R&D cost under section 115BAC of the Income Tax Act, will allow local players the flexibility or tax holiday to boost innovation. Additionally, SEZ duties levied on raw materials and imported inputs instead of the final products, will go a long way in facilitating a single window clearance for local manufacturers and streamline their operational efficiency”.
Dr Ramakanta Panda, Chairman, Asian Heart Institute, Mumbai
Budget 2024 must prioritise medical education. Many poor and middle class who have a genuine interest in studying are not able to get MBBS seats. In contrast, the students who can afford it, are not passionate about it. We need more medical colleges to give a path to these bright economically challenged students to pursue medicine. When I look back at my education, in 1973, my college fee was 16 rupees per month. If I had to pay lakhs of rupees in those days (crores in today’s time), I would never have become a doctor. Similarly, when it comes to post-graduation, private hospitals in the USA train students free of charge. This must be allowed in India as well to add to the specialization pool.
Aman Puri, Founder, Steadfast Nutrition
The healthcare sector eagerly awaits policy shifts that will go a long way into shaping the nation’s future. Our investment in healthcare has stagnated in the last few years, a reason for the country’s poor health infrastructure. We need to strengthen primary and secondary healthcare in India considering it is the world’s most populous country, accounting for 20% of the global disease burden. There is an immense shortage of doctors and hospital beds.
The interim budget allocation to healthcare was less than 2% of the GDP while the world average is 6%. I hope to see an increase in the GDP share to a minimum of 5% for the sector in the Union Budget. In recent times, we have witnessed the spread of new or less-discovered diseases, which have proved to be fatal and require a lot of investigation and research. Building new infrastructure is required to prevent air and water-borne diseases, necessitating the need for increased expenditure on healthcare in the Union Budget 2024-25.
Only when the allocation to healthcare increases will we be able to solve the problems plaguing the sector. We are the most populous country with a lot of diversity, which necessitates disease prevention strategies and allocation of funds for knowledge enhancement in the rural areas by setting up more public health units, giving proper training to the health workers at the grassroots level, nutrition guidance at the very early stage, including to lactating mothers to prevent diseases like diabetes and cardiovascular diseases. I hope the Union Budget 2024 takes steps to address the issue.
Suresh Garg, CMD & Founder of Zeon Lifesciences Ltd
We are optimistic about the budget, recognizing the government’s commitment to fostering innovation and sustainable growth in the nutraceutical, health & wellness, and Ayush industries. Continued emphasis on R&D funding, robust skill development programs, and enhanced regulatory frameworks could solidify India’s position as a global leader in these sectors.
The industry also seeks increased budget allocation for healthcare, potentially raising it to 2.5% of GDP from the current 1.8%, as recommended by the NITI Aayog. This would support infrastructure development, particularly in underserved rural areas, and address the critical shortage of healthcare professionals. Additionally, work on vaccine development must be a key focus point. Currently, there are viruses such as Herpes Simplex Virus, HIV-1 and many more that require vaccines, and research in this field can place us on the world map.”
Dr. Jyoti Kapoor, Founder & Director, Manasthali Wellness
Mental health issues are prevalent, yet poorly managed conditions and are affecting a significant number of our population. Unfortunately, people are not reporting these conditions as the cost of available medications and therapies often proves challenging. With declining mental health, there has been an increase in the need for health insurance policies that cover both physical and mental health.
In the upcoming budget, we urge the government to remove or reduce the 18% Goods and Services Tax (GST) on mental health services. While government centers receive some relief, private practitioners are left burdened. Extending tax benefits to private practitioners is crucial, given the high operational costs for the average therapist. In addition to acknowledging the financial difficulties experienced by private practitioners, this change would help lower the cost and increase public accessibility to mental health care.
