The Uncharitable Trust Hospitals

A huge amount of capital is being invested in multi-specialty hospitals in Maharashtra which take advantage of the Public Charitable Trust Act, 1950 and avail of tax waivers and land concessions. However, the mandatory benefi ts to poor patients in lieu of these waivers are totally ignored. There should be an investigation into this social and economic crime and the loss to the exchequer should be recovered along with penalties imposed on these hospitals.

The Public Charitable Trust Act, 1950 was enacted to enable private entities to set up charities that would serve the deprived sections of society. To encourage and incentivise such investments, the Act provided for waiver of income tax for such charitable insti­tutions. Historically, many seths (merchant capitalists) invested in setting up charitable hospitals. The initial trend was to build and equip the hospital and even provide working capital annually and hand it over to the government or the municipality to run it. Their only expectation was that the particular hospital should be named after a close relation. Thus many of the top public hospitals we have in Mumbai today, including the teaching hospitals, like the J J Hospital, Cama Hospital, KEM Hospital, Nair Hospital, and the two Bhabha Hospitals were established through charities and later became government or municipal hospitals.1 Apart from this, many small hospitals and dispensaries were set up by businessmen and their charities, by missionaries and other motivated individuals to provide healthcare to those in need.

Post-Independence the trend changed. Bourgeois capital entered the fray and began to use the Public Trust Act to set up hospitals, instead of using the Companies Act, so that they could get the advantage of the tax waiver benefits. While a number of them began with being genuinely charitable, over time most of them have become hospitals for the use of the elite or those who can afford health insurance. The classic examples are the Jaslok, Breach Candy, Bombay Hospital, Leelavati, Hinduja, Nanavati, and Ambani Hospitals apart from others that no longer engage in any form of charity or follow the minimal provisions of the law for providing free services in lieu of the tax breaks. Thus their not-for-profit status needs to be challenged and all taxes that were forgone along with appropriate penalties should be collected from them. The Maharashtra assembly has rightly raised the issue of having the Economic Offences Wing (EOW) investigate the ­finances of these hospitals. Further, the issue is not only the tax waivers but also a host of other benefits they may have received like concessional land2 or a cheap lease rent, extra floor space ­index (FSI), concessional utility rates, waivers or concessions for other taxes like octroi, customs duty, etc. All these benefits add substantially to the surpluses of these hospitals. And if there is no charity forthcoming from them, it amounts to a huge economic and social crime that should be investigated.

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