ISLAMABAD: The representatives of hospitals Thursday expressed serious concern over the imposition of 17 percent sales tax on supplies to hospitals, increasing cost of medical treatment in Pakistan.

In this regard, a joint meeting of the representatives of hospitals was held on Thursday to discuss the negative impact arising out of the omission of entry number 52-A from the Sixth Schedule (Exemption Schedule) of the Sales Tax Act, 1990.

A participant of the meeting from Karachi told Business Recorder that consequently, supplies to hospitals have been slapped with a whopping 17 percent sales tax and three percent “further sales tax” besides five percent extra tax on gas bills.

The meeting was attended by representatives from almost all hospitals including Aga Khan University Hospital, Tabba Heart/Kidney Hospitals, Liaquat National Hospital, Kidney Centre, LRBT, SIUT, Memon Medical Institute, Lady Dufferin and Zubaida Medical Centre.

The meeting was also attended by leading tax lawyer Arshad Shahzad and tax consultant Saifuddin Adeeb.

Previously, supplies to hospitals were exempt under above referred entry No 52A of the Sixth Schedule, however, in a most surprising move, the government, vide the Finance (Supplementary) Act, 2022, has abolished this entry.

Resultantly, almost all purchases/imports by hospitals, including majority of machinery and equipment are now subject to sales tax @ 17 percent [and Further Tax @ three percent]. This has raised the cost of hospitalization enormously.

The participants emphasized the fact that the government and the FBR had no intent to increase the cost of medical treatment in Pakistan owing to the fact that another amendment to allow sales tax zero rating to the pharma sector was brought in the better interest of the common man and to protect the health and pharma sector, therefore, exemption, which was earlier available to Pharma section, was replaced with zero-rating to reduce the cost of medicines in Pakistan.

The government while adequately protecting the pharma sector seems to have overlooked to protect the health sector from the impact of the sales tax on supplies of essential equipment, consumables, and a whole host of other devices and tools.

The participants of the meeting agreed to jointly take up the matter with concerned authorities including Health Ministry and Finance Minister with request to revert back the above referred amendment to Sixth Schedule of the Sales Tax Act, 1990 and to restore sales tax exemption.

Copyright Business Recorder, 2022