Union Budget 2023: Pre-Budget expectations of the healthcare sector
The announcement of the Union Budget is right around the corner. Be it salaried class, small entrepreneurs or large corporates everyone is looking forward to it. The COVID-19 pandemic has increased the emphasis on the country’s healthcare sector which is aiming to grow and expand like never before. Like other sectors, the healthcare sector, too, has high expectations from the Union Budget 2023 like the establishment of a healthcare infrastructure development fund and provisions of various tax benefits the expectations from the Union Budget 2023 are high.
The Union Budget 2023 will be presented by the Finance Minister, Nirmala Sitharaman on February 1. The Budget presentation will be then followed by discussion and voting. Following are Budget expectations for healthcare sector to watch out for.
Expansion of Ayushman Bharat Scheme to India’s missing middle
The government is expected to expand the coverage and benefits of the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY), the world’s biggest health insurance scheme, to the non-poor segments of society. This section is termed the ‘missing middle’ in a report published by the NITI Aayog titled “Health Insurance of India’s Missing Middle”.
As per the report, the missing middle account for nearly 40 crore Indian citizens who still lack any health insurance protection. It is widely expected that the Union Budget will extend health insurance scheme coverage to this section of the citizens devoid of it.
Increase in tax deductions on preventive health checkups
Most citizens are hoping for the announcement of an increase in tax benefits on preventive health checkup expenses. The expectation is that the tax deduction limit would be raised from Rs 5,000 to Rs 15,000 per family. The tax benefit will encourage more citizens to opt for preventive health checkups, this could help in early diagnosis, which in turn can improve chances of survival in case of life-threatening diseases.
PLI Scheme for Healthcare Services
The government had earlier introduced the Production-Linked Incentive (PLI) scheme for medical devices. Given its success, the healthcare sector now expects the budget to also consider introducing a service-linked scheme for the healthcare sector. This scheme should provide incentives to companies engaged in the business of providing healthcare services or even in the development of medical infrastructure or hospitals.
Provision of higher tax benefits for healthcare skilling and development
The healthcare industry has the pre-budget expectation for the provision of higher tax benefits on healthcare skilling and development expenditure. Currently, according to Section 35CCD, of the Income Tax Act, a manufacturing company can have a weighted deduction of 150% of the expenses incurred on the skill development of its employee. This indicates the company can recover the investment made towards the skill development of its employees necessary to keep up with the evolving industry.
The healthcare sector expects this provision to be extended to healthcare organisations like hospitals and diagnostic companies for apprentice training of healthcare professionals.
Establishing the healthcare infrastructure fund
The government has focused on the Micro, Small, and Medium enterprises (MSME) sector, startups, medical device parks and other sectors in many ways. They have set up dedicated funds and schemes to boost infrastructure development in these sectors. The healthcare industry also expects the setting up of a specialised fund for healthcare infrastructure development.
This way the necessary financial benefits like low-cost capital, subsidies for medical equipment, dedicated viability gap funding for PPP projects, and others can be provided for the development of projects and to various hospitals and medical colleges.
Lower GST on software-based services related to medical devices
The software required for use of medical devices presently attracts a GST rate of 18 percent. The sector expects the government to lower the GST rate for software costs. This will help reduce the cost of manufacturing medical devices in India and boost domestic production.
The demand for healthcare services is growing in India. The sector is likely to remain in focus given the fact that we are still recovering from the COVID-19 pandemic. A higher budgetary allocation for the healthcare sector will aid in making a ‘Healthy India’.
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