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Patients complain that private hospitals unfairly add VAT to bills
The introduction of the value added tax (VAT) last month to the health sector is causing much confusion and ambiguity among in-house patients in private hospitals who complain that they are being unfairly charged VAT for pharmaceutical drugs.
Private hospitals are charging 15% VAT on the total bill of patients being discharged including 15%on pharmaceutical drugs administered.
A Private Hospitals Association spokesman said that although no clear instructions have been received from the Finance Ministry or the Inland Revenue Department with regard to the VAT on drugs administered to patients during hospitalisation, VAT is being charged.
Association General Secretary Wijay Ransi said that with no clear guidelines, the private hospitals have decided to charge VAT. “We are charging VAT on doctors’ fees, drugs and all services provided to in-patients,” he said.
Meanwhile the Finance Ministry confirmed that the pharmaceutical drugs administered to patients were liable for VAT. Fiscal Policy Director A.K.Seneviratne said that when drugs are given in hospitals it becomes a service and therefore VAT inclusive.
Even pet lovers have to foot an extra 15% on the bills during their regular visits to the vet.
However Mr. Seneviratne said that drugs sold at pharmacies will be VAT exempted. The Government last month had included all pharmaceutical drugs in its drug exemption list.
Last week the issue was taken up by JVP leader Anura Kumara Dissanayake. The JVP leader questioned the move to chargeVAT on blood and other medical tests done on patients when the Government had promised exemption of VAT on pharmaceuticals.
Furthermore although essential food items including dhal, sugar, potatoes, onions, sprats and canned fish were announced as exempted from VAT the prices of those items have gone up in the wholesale and retail outlets.
A member of the Chamber of Commerce representing wholesale importers of essential food items in Pettah said that the traders are unfairly increasing the prices of essential goods although there is no VAT imposed on them. They are citing the rains and floods in Tamil Nadu to push up the prices, he said.
Meanwhile the Finance Ministry said around five cases have been filed in the Supreme Court against the imposition of VAT. Individuals and consumer rights movements are questioning the legality of executing the VAT without the Bill being passed in Parliament.
Mr. Seneviratne said that VAT is being introduced retrospectively and that the Bill will be taken up soon in Parliament. He said there has been a precedent when in 2015 the VAT was reduced to 11% from 12% by the last government, the new government implemented it in January 2015. However the Bill was passed in Parliament only in October 2015.
He said the Bill is being drafted at the Legal Draftsman’s office and will be ready to be presented to the Attorney General, the Cabinet, the public and in Parliament. “We hope to present it by next month,” he said.