On 1 July, several new categories of services became subject to service tax following the implementation of the Finance Act, 2010, at the end of May.
Healthcare services such as nursing homes and clinics are included, but the services will only attract tax when paid for by a business entity. Insurance companies paying for treatments for their customers will be liable to pay service tax, as will facilities that store and maintain medical records.
The move will inevitably lead to higher insurance premiums and hospital bills, said Shilpa Sharma, head of the indirect tax practice at Vaish Associates. “It has been made very clear that the hospital will have to pay the service tax, but actually this tax burden will clearly pass on to the patients,” she told India Business Law Journal.“
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