Cosmetic Surgery Tax in India: Medical tourism and Women to be hit hardest

July 9, 2009 - PRLog -- In Budget 2009, the Finance minister of India has proposed service tax on Cosmetic Surgeries, making Plastic and Cosmetic surgery the first medical specialty to be taxed in India. Plastic surgeons are just not cosmeticians with scalpels but also cater to the society by treating trauma, burn victims, congenital defects, developmental abnormalities, diabetic foot, bedsores etc besides doing cosmetic surgery. They perform some of the most complex and challenging surgeries in medical field. This decision has put these medical services in the same bracket with beauty parlour services.

Plastic surgeons in India are already paying maximum indemnity insurance premium, six times more than an MBBS doctor. This is more than any other specialty barring Anesthesia. While Plastic and Cosmetic Surgery is singled out for this tax punishment, dental treatments for straightening of teeth, dental veneers, dental whitening treatments, LASIK laser for glasses removal, Obesity reduction surgery (Bariatric Surgery) are some of the treatments which also fall in the same category of beauty enhancement and are not taxed.

According to Dr K M Kapoor, Cosmetic Surgeon & Founder of India’s leading Plastic Surgery website www.indiaplasticsurgery.com, “A majority of Cosmetic surgery patients in India (approx 85%) are women and this tax is going to hit these women hardest. In India, contrary to popular perception of this surgery of being for rich people and movie stars, it is the middle class which goes for these procedures the most. The single biggest reason for cosmetic surgery in India amongst women is finding a suitable match. Young women go for liposuction for excess fat removal to look slim, breast implants in case natural development is not adequate, nose reshaping to correct crooked or deviated noses and list is endless. All this is done to look her best, while she meets the prospective husband and his family members for an arranged marriage.  The groom family makes its decision just by   looking at the physical appearance of the girl. These girls and their hapless parents, who have saved hard  to afford these procedures, would be now hit more as they will have to pay a ‘Vanity Tax’ for choosing to look better .”

Dr K M Kapoor added, “Another big causality of this tax would be Medical Tourism in India. Medical tourism concept is basically healthcare outsourcing while India earns precious foreign exchange from overseas patients. In a study done in UK, 31 % of medical tourism business comes from Cosmetic Surgery. By taxing these services, the Indian Government would make these procedures more expensive and Indian hospitals would be less preferred as compared to Malaysia, Thailand etc where Governments are promoting medical tourism and cosmetic surgery industry with more incentives so as to get more visitors and revenue. The projections of CII Mckinsey study, of India getting 1 million patients and revenue of two billion dollars by 2012, would never be met by making Cosmetic surgery more expensive in India.”

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 its first year, but fell well short of expectations and brought in only $6.8 million. The poor revenue result and administrative challenges of New Jersey's tax illustrated the inadequacy of the law - ultimately none of the states in USA  passed cosmetic medical procedure taxes in 2005 and it was repealed finally even in New Jersey. Even in California, the very capital of cosmetic surgery, such procedures are tax-free.

Taxing the cosmetic surgery at this stage, when it is still in infancy stage in India, would severely hamper its growth. India is also bound to lose its premier position in medical tourism market as Cosmetic Surgery is biggest attraction amongst all the medical procedures opted for by overseas patients. The total revenue loss in Medical Tourism and tourism per se, is likely to be far more than the tax collected.