Dr K M Kapoor
Taxing the cosmetic surgery has severely hampered its growth in India in last one year. Medical tourists arrivals in India for Cosmetic Surgery have drastically fallen due to sudden rise in costs. Cosmetic Surgery has been the biggest attraction during past years amongst all the medical procedures opted for by overseas patients. While recession in western world and post 26/11 adverse reports about law and order situation in India were already taking the toll on Medical tourism industry in India, introduction of Cosmetic Surgery tax has further caused major damage to this upcoming industry. In view of the upcoming Commonwealth Games (CWG), medical tourism option, of undergoing an elective Cosmetic Surgery or a Botox or Juvederm jab, was supposed to be a big draw for foreign tourists. But this may not be so in view of rise in prices of cosmetic surgeries in India.
In Union Budget 2009, the Finance minister of India had imposed service tax on Cosmetic Surgery, making it the first medical specialty to be burdened with service tax in India. According to Dr K M Kapoor, Director, AntiClock and Founder of top Indian Plastic Surgery website - www.indiaplasticsurgery.com, “A big casualty of this tax has been Medical Tourism in India. There were high hopes of an ‘MT revolution’ after the success of IT revolution. The projections of CII Mckinsey study, of India getting 1 million patients and revenue of two billion dollars by 2012, would be improbable to achieve by making Cosmetic surgery more expensive in India. In India, Cosmetic surgery has been a major contributor to the growth of Medical tourism industry before imposition of service tax. Overseas patients would opt for surgery in India only if difference in prices is huge while getting the top level quality of service.”
Medical tourism concept involves healthcare outsourcing, wherein overseas patients get cost effective and high quality care while Indian government and hospitals earns precious foreign exchange from them. In a study done in UK, 62 % of medical tourism business comes from Cosmetic Surgery and Cosmetic Dentistry. “By taxing these services, the Indian Government has made these procedures more expensive and Indian hospitals have become less price competitive as compared to the ones in Malaysia, Thailand etc. Governments of other Asian countries are promoting medical tourism and cosmetic surgery industry with more incentives so as to get more revenue from medical tourism” said Dr K M Kapoor. Also, this decision has put Plastic Surgeons, who perform some of the most complex and challenging surgeries in medical field, in the same bracket with ‘beauty services’ provided by beauticians as beauty parlour services are already under service tax net.
The New Jersey in US had set a precedent when it became the first and only state in USA to tax Cosmetic Surgery procedures during its 2004 legislative session. The tax was predicted to generate $24 million in the first year, but brought in only $6.8 million. Ultimately none of the states in USA passed cosmetic medical procedure taxes in 2005 and it was repealed finally even in New Jersey. In California, the capital of cosmetic surgery, such procedures are tax-free. Even the recent attempts to impose it again, did not materialize due to stiff opposition.
In India, this tax is expected to create similar situation in future. The total revenue loss in Medical Tourism in India is likely to be far more than the cosmetic surgery tax collected. There is a serious need to review this tax in union Budget of 2010 for revival of medical tourism in India.
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