Direct Taxation in India Applicable on Doctors/ Medical profession.

-You can avail the benefit of presumptive taxation scheme where your Gross annual is less than 50 lakhs than you can adopt section 44ADA & under this section your income is assumed to be 50% of gross receipts. (Only Individuals and Firms)

-Apart from above you can claim tax benefits exemptions like HRA & deductions under Chapter VI-A (80C, 80D, etc.)

-If your annual income is over INR 2.5 lakh, you must file income tax return u/s 139.

-Need to maintain Book of Accounts – If your Income from profession exceeds 1,20,000 or his total sales or gross receipts, as the case may be, in business or profession exceed or exceeds 10 lakh rupees in any one of the three years immediately preceding the previous year;

Types of Books Should Doctors should Maintain?

Cashbook, Ledgers, copies of bills above Rs.25, Original bills above Rs. 50, signed payment vouchers, A daily cash register in form no. 3C listing details of patients, service provided, fees received with receipt date, Inventory of drugs, medicines, and other consumables.

-If your income for a financial year is over INR 50 lakh, you must hire a professional chartered accountant to audit your book of accounts. Failing to do so will result in a penalty of INR 5 lakh u/s 271.

Indirect Taxation (GST) in India Applicable on Doctors/ Medical profession.

GST registration limit

  • Mandatory GST registration in case supply (Goods/ Service) outside the state.
  • Within State where turnover in case of sale of goods exceeds Rs.40 Lakh in normal category state & Rs.20 Lakh special category
  • Within State where turnover in case of providing services exceeds Rs.20 Lakh in normal category state & 10 Lakh special category state.

Exemption to Health Care Services under GST:

Health Care Services by a Clinical Establishment, an Authorised Medical Practitioner or Paramedics;

  • Services provided by way of transportation of a patient in an Ambulance other than those specified in (a) above.

Taxation of Doctors in India

Following services provided by health care professionals & their Taxability

  • OUT PATIENT DEPARTMENT SERVICES (OPD):- Medical consultancy and treatment without admitting a patient in the Hospital. These services are exempted from GST. However, GST is payable on supply of Medicines, implants, consumables to out-patients through hospital owned pharmacy to outpatients.
  • INPATIENT DEPARTMENT SERVICES (IPD):- Supply of Medicines, consumables, implants, charges for room rent, consultancy charges, food & beverages, bed charges, operation theater rent, equipment charges, Doctor fees, pharmacy consumed, various testing like blood test etc. It is a Composite Supply. These services are exempted from GST.

However, if if food & Medicine is supplied separately on optional basis, it is not a composite supply. Hence, GST is payable.

  • RENTING GST is leviable on rent paid/payable for premises, given on lease by hospital. E.g. Medical Shops on rent in Hospital Premises, pathology on rent in hospital.
  • WASTE TREATMENT FACILITY:- Services provided by operators of the common bio­medical waste treatment facility to clinical establishment by way of treatment or disposal of bio-medical or the processes incidental thereto are EXEMPT.
  • MEDICAL TEST SERVICES: – Medical Test (either done in own Clinical establishment or done in the separate clinical establishment setup specially for such test) are 3xempt under GST
  • MEDICAL COUNSELLING SERVICES: -If consultancy has been given for the purpose of CURE then it is exempted but if the purpose is CARE then GST will be payable.
  • CORD BLOOD BANK SERVICES:- Services provided by the Cord Blood Banks by way of preservation of stem cells or other service in relation to such preservation are EXEMPT.
  • BEAUTY TREATMENT SERVICES:-. Beauty treatment services are mostly provided for the CARE purpose and not for the CURE purpose. Hence GST will be payable.
  • SUPPLY OF FOOD WITH HEALTH CARE SERVICES:- Food supplies to patients as part of health care services is composite supply & not separately taxable.
  • SERVICES PROVIDED BY VETERINARY DOCTORS:- Services in relation to health of animals and birds are exempt from GST.
  • AMBULANCE SERVICES:- Ambulance services are also from the ambit of GST
  • The supply of medicines and allied items provided by the hospital through the pharmacy to the inpatients is part of composite supply of health care treatment and hence not separately taxable. The supply of medicines and allied items provided by the hospital through the pharmacy to the outpatients is taxable
  • Services provided by diagnostic center is a clinical establishment and providing healthcare services is exempted from GST.
  • Taking of X-Ray photographs is nothing but rendering professional services and does not involve any element of sale. It is not a commodity can be sold by the radiologist to the patient. In the GST, it would be treated as composite supply, where healthcare services is principle
  • GST is leviable on rent paid/payable for premises, given on lease by Hospital

My best wishes to All doctors on Doctors Day – 1st July 2022

Author Bio

Qualification: CA in Practice
Company: GSPT & Associates
Location: DELHI, Delhi, India
Member Since: 28 Aug 2020 | Total Posts: 3
Mr. Komal Tyagi is Co-Founder partner of the GSPT & Associates LLP. He has qualified Chartered Accountancy (2018) with multiple distinction at Final Level. He is a graduate from Delhi University in 2013 & completed his master in Finance & Taxation. He has experience in the field of Dir View Full Profile

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2 Comments

  1. C V SURYAM says:

    You could have added the taxability of room rent under GST also as per the recommendations of 47th GST Council meeting. Also hope you would avoid spelling errors in future.

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