India spend a modest 2-3% of its GDP on healthcare, significantly less than developed countries, which spend over 15-20%. Consequently, many patients either pay for medical expenses out of pocket or rely on government-subsidized healthcare.
It is concerning that individuals who pay for their medical expenses from their income are also taxed on that portion. This situation seems unreasonable, as the government does not provide adequate healthcare services free of cost, yet still expects citizens to pay taxes on their healthcare expenditures.
For instance, consider someone earning 50,000 rupees a month. They are taxed on the entire amount. If they spend 10,000 to 15,000 rupees on medical expenses, such as dialysis, they still have to pay tax on that portion spent on healthcare. This situation seems particularly unfair given their significant out-of-pocket medical costs.
There may be valid concerns about verifying healthcare expenditures, as people might claim false amounts. However, many existing exemptions, such as house rent and travel expenses, are verifiable through established government processes. Therefore, the same methodology could be applied to medical expenses, where taxpayers could provide medical bills for verification. This should not serve as a barrier to implementing such measures.
There should not be any cap on such deductions from the income being calculated for the purpose of income tax. In fact, the higher the expense, the greater the burden on the individual. Therefore, all actual medical expenses incurred should be exempt from income tax calculations.
This approach could indirectly alleviate the burden of healthcare expenses on both individuals and the country. For instance, if the government exempts the amount spent on annual health check-ups from income tax, it would encourage people to undergo these check-ups. Early detection of chronic conditions through such measures would enable timely interventions, preventing these conditions from worsening.
Many countries ensure the right to health for their citizens. In India, while we recognize that achieving this ideal is a long-term goal, we are not even demanding it at this moment. What we are advocating for is that, given the current situation where quality healthcare is not universally provided, the government should at least refrain from taxing the money citizens spend on their healthcare. Ideally, the government should be covering these expenses, but until then, removing this additional tax burden would be a step in the right direction.
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