Healthcare industry seeks tax breaks on diagnostic services, push to insurance business

As Finance Minister Nirmala Sitharaman is scheduled to present the Budget 2025-26 on February 1, the healthcare sector anticipates the introduction of policies and increased allocations which can be pivotal in providing affordable care to citizens.

With increased funding, targeted investments in infrastructure, and a push toward bringing the entire population under health insurance, the government can make a lasting impact on the accessibility, affordability, and quality of healthcare. The move will reduce long-term healthcare costs and create a healthier and more productive workforce.

Allocate 2.5% of GDP: FICCI

Industry body FICCI recommends increasing the health sector allocation to 2.5 per cent of the GDP by 2025, as envisioned in the National Health Policy of 2017. This will help strengthen healthcare infrastructure, ensure equitable access, and move closer to universal health coverage (UHC) goals

India’s public expenditure on healthcare touched 2.1 per cent of the GDP in FY23 and 2.2 per cent in FY22, against 1.6 per cent in FY21, as per the Economic Survey. Industry body FICCI recommends increasing the allocation to 2.5 per cent of the GDP by 2025, as envisioned in the National Health Policy of 2017. This will help strengthen healthcare infrastructure, ensure equitable access, and move closer to universal health coverage (UHC) goals.

The diagnostics sector has high hopes for financing healthcare and improving accessibility. Around two-thirds of diagnostic facilities are concentrated in the cities only. “Transformative diagnostics are fundamental to driving the agenda of healthcare. Investments in research can bring in transformative technologies like AI-driven diagnostics and gene-based testing for precision and efficiency. Tax breaks and subsidies on diagnostic services can also make preventive healthcare affordable,” says Dr Sameer Bhati, Director, Star Imaging and Path Lab Pvt Ltd.

The healthcare Industry is of the view that the government should increase the tax exemption for preventive health check-ups under Section 80D from Rs 5,000 to Rs 20,000. Additionally, allow employers a separate annual deduction of Rs 10,000 per employee for sponsoring these check-ups, over and above current medical reimbursement limits, given the rise in lifestyle diseases.

The industry also wants the government to double the deduction for health insurance premiums under Section 80D to Rs 50,000. Expand eligible dependents under this provision to encourage broader health coverage. Besides, it is for reducing import duties on lifesaving equipment to ensure affordable healthcare delivery. Offering tax incentives to domestic manufacturers will attract global manufacturers. Additionally, it is seeking an increase in the the depreciation rate for lifesaving equipment from 40 per cent to 60 per cent, considering their short lifespan and fast-paced technological advancements.