Seeking to firm up the health sector in the country, Finance Minister P Chidambaran on Friday announced a five-year tax holiday for setting up hospitals anywhere in India.

Presenting the annual budget for 2007-08, he said the hospitals would be set up specially in tier-2 and tier-3 (smaller) towns with an aim to serve the rural hinterland.

"Certain specified urban agglomerations will not be covered," Chidambaram said.

This window will be open for the period April 1, 2008 to March 31, 2013, during which the hospital must commence operations.

Similarly, a five-year holiday from income tax has been announced for two, three and four star hotels established in specific districts which have UNESCO-declared 'World Heritage Sites'.

The hotel should be constructed and start functioning during April 1, 2008 to March 31, 2013. "The measure has been taken in view of significant rise in tourist arrivals, specially for cultural tourism," the finance minister said.