February 29, 2008

Budget 2008: 5-yr tax holiday for all hospitals

Budget 2008: The Finance Minister on Friday extended a five-year tax holiday, currently given only to hospitals in the rural areas, to those across the country, sending the shares of healthcare providers higher.

The Finance Minister P.Chidambaram, in his budget for 2008/09, also proposed an excise duty of 8 percent for all goods produced in the pharmaceutical sector, down from 16 percent.

He also proposed to reduce by half the customs duty on certain specified life saving drugs, and its bulk drug ingredients, to 5 percent. These drugs would also be exempted from excise or countervailing duties.

Hospital stocks such as Apollo Hospitals Fortis Healthcare and Malar Hospitals were up between 2-6 percent after the finance minister proposed the tax holiday.

The other drug stocks, which rose immediately after the excise and customs duty cuts, have since fallen or are trading flat.

Aurobindo Pharma was up 1.3 percent, Cadila rose 2.7 percent, Dishman was 3.6 percent higher while Wockhardt was up 1.1 percent.

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