The federal government in the budget presented for fiscal year 2024-25 has proposed to remove the sales tax exemption under the sixth schedule on supplies to charitable hospitals. The federal government in the Finance Bill has eliminated the entry number 166 of the Sixth Schedule of S.T.A. 1990, imposing a 18 percent sales tax on supplies to the welfare healthcare sector. The new tax policy will be applicable to all supplies of charitable hospitals with 50 beds and above, as well as 200-bed welfare hospitals for the purpose of teaching have to pay 18 percent of sales tax.

The imposition of an 18 percent of sales tax extends to a range of medical supplies and equipment – including vaccines, testing kits, tubes, medical gloves, and masks – used by these institutions. Similarly, the surgical instruments, operation equipment and machinery parts used in the charitable and welfare hospitals are now subject to the 18 percent of sales tax. The decision to impose tax on welfare and charitable hospitals may significantly contribute to increase the operational costs of healthcare and medical treatment in Pakistan.

 Credit: Independent News Pakistan (INP)