Fact Check: Viral letter about five per cent service tax on health care services is from 2011

New Delhi (Vishvas News): A letter is going viral on the internet, titled ‘A Letter For The Aam Admi: About Misery Tax,’ in which it is claimed that the Central government has proposed a five per cent tax on all healthcare services in this year’s Union Budget. The letter stated that if someone gets heart surgery done, he/she will have to pay a service tax of Rs 5,000 or Rs 10,000 more over and above the total hospital bill. Several internet users are now targeting the Central government by sharing this letter written by Dr Devi Shetty.

Vishvas News investigated the viral letter and found that the letter was written in 2011 when the then finance minister proposed a five per cent service tax on healthcare services if a patient gets treated in centralised air conditioning hospitals having 25 or more beds. However, the proposal was withdrawn after protests. The BJP-led Central government has not proposed any such tax in the Union Budget 2023-24. However, a five per cent GST on non-ICU hospital rooms was levied on non-ICU hospital beds last year.

Claim:

Sharing the letter on March 1, 2023, Facebook user Bappa Mukherjee (archive link) wrote, “A National government when imposes taxes and that too 5% on health care and services on its citizens it simply signifies that the government is heartless and pathetic.

Karnataka Congress Seva Dal also shared this letter (archive link) on February 26, appealing to PM Modi and Finance Minister Nirmala Sitharaman to withdraw this service tax.

An appeal to PM @narendramodi and FM @nsitharaman to WITHDRAW the inhumane SERVICE TAX on HEALTHCARE
Dr #DeviShetty pic.twitter.com/GLUaX2Svz7

— Karnataka Congress SevaDal (@SevadalKA) February 26, 2023

Investigation:

Vishvas News team carefully went through the letter and found that Dr Devi Shetty of Narayan Hrudayalaya has written this letter. Dr Devi Shetty has called to observe March 12 as Misery Day in protest against the proposal by the Centre. The letter urged the people to gather outside the Governor’s office in their respective states on March 12 to demand the withdrawal of the Misery Tax.

We searched about this on Google with related keywords and found a news report published by Moneylife on March 8, 2011. According to the news report, “the Union government’s proposal to levy five per cent service tax on health services has drawn strong criticism from the medical community. It has been described as a ‘Misery Tax’. Doctors say the proposal to tax healthcare will add to the concerns of the common man.

In an open letter addressed to the common man, Dr Devi Prasad Shetty, President of Narayana Hrudayalaya, has said, “This is not a ‘Service Tax’, it is a ‘Misery Tax’ because the government wants to make money from your money. Please don’t think that only rich people will be taxed, as the proposal says that only air-conditioned hospitals will have to pay tax. No surgery, simple or complex, can be performed without an air-conditioned operation theatre. Legally a blood bank can’t get a license without AC. CT, MRI and catheterization labs cannot function without ACs. Simply put, hospitals cannot function without ACs. People associated with the medical world have called upon other citizens to observe March 12 as ‘Misery Day’ to protest against the proposed service tax and demand its withdrawal. While presenting the Union Budget for 2011-12 last week, Finance Minister Pranab Mukherjee proposed a five per cent service tax on medical services. This includes medical services provided in hospitals having 25 or more beds with centralized AC.”

According to a news report published by The Times of India on February 28, 2011, the Central government has proposed to levy a five per cent service tax on treatment in private hospitals. It is paid either by individuals or by insurance companies or firms. While presenting the budget, Finance Minister Pranab Mukherjee said, “I propose to levy a tax on all services provided by hospitals having 25 or more beds, which have central air-conditioning facilities. However, all government hospitals will be exempted from this levy.”

After these results, we searched more about it on Google. A photo was published on the TimesContent website on March 12, 2011, in which it is written that “Dr Devi Shetty and his supporters protest against the imposition of service tax on healthcare in the Union Budget 2011-12 near MG Statue in Bengaluru on March 12, 2011.”

According to a report published by Hindustan Times on March 23, 2011, “the government has withdrawn the five per cent service tax on health services proposed in last month’s Union Budget. It was called ‘Misery Tax’. In view of the protest, the government has taken this decision.”

We also contacted Narayana Hrudayalaya about this viral letter through the mail. According to the spokesperson of Narayana Hrudayalaya, “A 2011 paper cutting in the name of Dr Devi Shetty is going viral. His views on service tax on health care at that time were presented in this viral clip. It was presented in a different context more than a decade ago. This is an old clip which is being used wrongly at the moment. The presentation made about his views at that time is being used wrongly. This is misrepresentation of facts. The Institute strongly condemns the misuse of such old statements to mislead the public.”

We also spoke to Muniram Singh, Owner and Tax Advocate, MR Singh & Co. He said, “GST was implemented after July 2017. Due to this, a tax was levied on every service. After it was introduced, GST was imposed on every service instead of service tax. So now there is no such thing as service tax.”

There is also no mention of service tax on healthcare services in this year’s budget.

However, on July 18, 2022, a news report by the Economic Times stated that in the 47th meeting of the Goods and Services Tax (GST) Council held on June 28-29, 2022, it was decided that five per cent GST will be levied on rooms in non-ICU hospitals with room rent of more than Rs 5000 per day. The GST amount on room rent of Rs 5000 per day will be Rs 250. The hospital room rent (without GST) for 2 days will be Rs 10,000 and GST on it will be Rs 500.

In this regard, CA Sandeep Kanoi, CEO of Tax Guru said, “Government has imposed five per cent GST on hospital rooms (non-ICU) from 18th July 2022. Room rent (excluding ICU) exceeding Rs 5000 per day per patient by a hospital will be taxed on the amount charged for the room at the rate of five per cent. The viral post talks about service tax, which is non-existent since July 2017.”

We scanned the profile of Facebook user Bappa Mukherjee who shared the old letter and found that 157 users follow him. He came to Noida in 2005.

Conclusion: Dr Devi Shetty issued this letter to the public in March 2011 regarding the proposal of a five per cent service tax on healthcare services in the Union Budget of 2011-12. After protests, the government had withdrawn the decision. After July 2017, GST replaced the service tax. However, in July 2022, it was decided to levy five per cent GST on non-ICU hospital rooms with rent above Rs 5000 per day.

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