Healthcare industry body NATHEALTH has sought rationalisation of GST and enhanced insurance coverage especially in smaller cities and towns from the upcoming Budget.

In its submission to the finance ministry on Wednesday , the industry body said that the healthcare sector has not been able to derive the benefits of the GST transition in comparison to other sectors.

In fact, the embedded taxes in the sector have increased in the post-GST regime compared to pre-GST period, it noted.

The industry body has recommended imposition of 5 per cent merit rate on the output healthcare services for all healthcare establishments (both private and government) with the option to claim full input tax credits.

Levying 5 per cent GST rate on output services for all private hospitals and an optional dual rate structure for government healthcare establishments could be an alternative, it added.

Presently GST is exempt on the healthcare services. NATHEALTH recommends imposition of 5 merit rate on these services as this would allow healthcare service providers to claim input tax credit, thereby lowering their embedded taxes burden.

NATHEALTH also sought clearance of working capital arrears both for providers and procurement organisations.

“It is imperative to build infrastructural capabilities so that people have greater access to quality and critical healthcare services. Viability gap funding by the government is essential to set up hospitals in tier-1 and tier-2 cities, encouraging increased investment in the healthcare infrastructure,” NATHEALTH President Shravan Subramanyam said.