CA Mohit Singhal

Among the busiest of professionals, doctors have little time to learn about the latest tax law. Tax planning is often neglected in the crush of other obligations. Being India’s Top 10s income earners, they have need to give more attention to their financial planning and taxation.

Here we are providing some necessary documentation and legal requirements for doctors in India as necessary to follow to avoid unnecessary payment of tax, interest & penalty.

Income Tax:-

Section 44AA read with Rule 6F

Section 44AA mandates the maintenance of books of accounts for the medical professionals for Income Tax purpose.

Those Doctors whose Gross Receipt/Collection exceed  ⇒ Rs. 1.50 Lakhs per annuam.

Books required to maintain

♠ Cash Book, Journal( if mercantile system), Ledger;

♠ Carbon copies of bills exceeding Rs. 25 whether machine numbered or otherwise serially numbered,

♠ Original bills wherever issued to the person and receipts in respect of expenditure incurred by the person or, where such bills and receipts are not issued and the expenditure incurred does not exceed fifty rupees, payment vouchers prepared  and signed by the person:

A person carrying on medical profession shall, in addition to the books of account and other documents specified in sub-rule (2), keep and maintain the following, namely :

a daily case register in Form No. 3C;

an inventory as on the first and the last day of the previous year, of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession. The books of account and other documents specified in sub-rule (2) and sub-rule (3) shall be kept and maintained for period of [Eight] years from the end of the relevant assessment year:

Penalty for non-maintenance of books of accounts is Rs. 25, 000. (As Per Section-271A of Income Tax Act)

Audit: 44AB

If practicing doctor is having gross fee collection of Rs. 25, 00,000 (twenty five lakhs)* or more during the previous year (April to March), then books of accounts should be audited by a Chartered Accountant in Practice.

Penalty for non-complying with tax audit is Rs.1, 50,000 or 1/2 % of gross receipt whichever is

lower. (As Per Section-271B of Income Tax Act)

* Rs. 25,00,000 has been proposed to substituted by as Rs. 50,00,000 from AY 2017-18 vide union Budget 2016.

Due Date:-

a) Non Audit Case: 31st July of the year

b) Audit Case: 30th September of the Year

Presumptive Tax Scheme for Professionals

Section -44ADA-(Extract of Section 44ADA from Proposed Finance Bill 2016)

This section is to be proposed only for Individual, HUF & Partnership firm to

–  Reduce compliance burden for small professional (Like non maintenance of books under section 44AA & no tax audit required if gross receipt not exceed Rs. 50,00,000/-)

–  To bring parity between small professional & businessmen.

AND to tax income on presumptive basis as HIGHER of 50 % of gross receipt or Total Income assessed.

As doctor’s always says

“Self-Medicine is dangerous to health which doctor discourages to every patient. Just like that Self –Tax planning is also not advisable.

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Category : Income Tax (20875)
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Tags : section 44AB (101) Section 44AD (94)

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