As the countdown has started for the Union
Budget presentation on March 16, the pharmaceutical and healthcare sectors are waiting with bated breath announcement of some encouraging budget proposals ensuring necessary impetus to these sectors.
A check on the cross-section of various segments of these two industries on the eve of the budget reveals that the leaders are harbouring high hopes from the Union Finance Minister Pranab Mukherjee.
The pre-budget expectations from the industry included increase in weighted deduction for research and development, deductions for urban-are hospitals, specific standards for business cycle losses, cut in the customs duty on supplements, exemption in customs duty on all life-saving drugs and diagnostics, viable abatement rates, and incentives to the exports.
“Presently, only weighted deduction for in-house R&D is allowed, without specific tax benefits for units engaged in R&D or contract manufacturing. Since both activities are pivotal growth drivers, tax breaks are indispensable to accelerate growth and make India an attractive R&D and contract manufacturing hub. Benefits for such units can be provided via deduction from profits linked to investments, which includes permitting research tax credits to offset future tax liability,” a spokesman of the Organisation of Pharmaceutical Producers of India (OPPI) said.
“Moreover, clinical trials done in approved hospitals and institutions by non-manufacturing firms should be covered within the ambit of expenditure eligible for weighted deduction. And apart from companies into manufacturing activities, weighted deduction should be available to companies where R&D expenses are incurred for manufacturing work partly or wholly outsourced,” he said.
According to Gautam Khanna, executive director of 3M Healthcare India and chairman – Medical Device Forum- FICCI, the healthcare industry should be given the infrastructure status. “This will help in improving the investment activity for healthcare sector which is the need of the hour. The Government should take this year’s health budget as an opportunity to work towards building an accessible and affordable healthcare industry in India,” he said.
Khanna also suggested that all life saving medical devices, consumables used with devices in the specific life saving treatment procedure and their spare parts should be exempted from customs duty. “Government should reduce the import duty on sophisticated medical equipments and consumables to improve the treatment opportunities for patients in India. This step will make healthcare affordable and firmly put India on world medical value travel map. Healthcare sector should be eligible for loans and financial assistance on a priority basis, at concessional rates, as provided to the infrastructure sector,” he added.
“As per the current tax laws, hospitals in India (except excluded areas) are eligible for a five year tax holiday. A long standing demand of the industry is to be accorded an ‘infrastructure status’ to be eligible for a 10 year tax holiday. Alternatively, an option to select the tax holiday block of 5 years in a 10 year period should be provided. The Government should consider re-introducing the 10 year tax holiday for companies engaged in scientific R&D under erstwhile Section 80-IB(8A). Research tax credits (similar to those prevalent in other countries) for setting-off against future tax liability should be introduced,” said Nabin Ballodia, partner-tax at KPMG.
“We hope that the upcoming union budget benefits the healthcare sector and recognize the role of quality service providers,” said Dr Sanjeev Chaudhry, CEO of Super Religare Laboratories Ltd. He said diagnostic services should be kept out of the preview of service tax so that the cost of healthcare, including treatment and diagnosis, goes down considerably, benefiting the common man.
He called for tax benefits for accredited laboratories and a strict control on unaccredited ones. He lamented that only 299 of the total over 40,000 laboratories are accredited to NABL. As of now quality service providers only incur higher costs and get no benefits.
“The upcoming budget should provide an opportunity of bringing together the world’s largest health and child care systems through flexible frameworks that ensure a continuum of care with normative standards, while responding to local needs at village and habitation levels. Convergent action over the next financial year will translate this vision into programmes that will touch the lives of all citizens, meet their expectations and also fulfilling their rights – particularly the rights of women and children in the communities, where they live and grow,’’ observed Harpal Singh, chairman of Nanhi Chhan Foundation. Presently the mentor and chairman emeritus of Fortis Healthcare Ltd, he is also the chairman of the Save the Children, India Board.
Source : pharmabiz.com