Freebees received by doctors

Freebees received by doctors from pharma firms to be treated as taxable income

Tuesday, August 7, 2012

 

Mumbai: The income tax department would tax the amount pharmaceutical and allied health sector industries spend on freebies for medical practitioners and their professional associations. Those who accept the freebies will also be taxed, according to a circular issued by the Central Board of Direct Taxes (CBDT).

The decision follows amendment to the Medical Council of India (MCI) regulations banning doctors and their associations from accepting freebies that include gifts, money, travel facility and hospitality extended by pharma companies and manufacturers of medical devices and nutraceuticals.

Presently, the income tax department grants tax exemption to money spent on business promotion. The department accepts companies’ claim and allows tax deduction. “Henceforth, the pharma companies cannot claim this benefit because the regulations prohibit it,” according to an income tax official.

“It is also clarified that the sum equivalent to value of freebees enjoyed by the aforesaid medical practitioner or professional associations is also taxable as business income or income from other sources as the case may be depending on the facts of each case,” the circular says. [Source: ToI]