Inadmissibility of expenses incurred in providing freebees to Medical Practitioner by pharmaceutical and allied health sector Industry

CIRCULAR NO. 5/2012 [F. NO. 225/142/2012-ITA.II], DATED 1-8-2012

It has been brought to the notice of the Board that some pharmaceutical and allied health sector Industries are providing freebees (freebies) to medical practitioners and their professional associations in violation of the regulations issued by Medical Council of India (the ‘Council’) which is a regulatory body constituted under the Medical Council Act, 1956.

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2. The council in exercise of its statutory powers amended the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 (the regulations) on 10-12-2009 imposing a prohibition on the medical practitioner and their professional associations from taking any Gift, Travel facility, Hospitality, Cash or monetary grant from the pharmaceutical and allied health sector Industries.

3. Section 37(1) of Income Tax Act provides for deduction of any revenue expenditure (other than those failing under sections 30 to 36) from the business Income if such expense is laid out/expended wholly or exclusively for the purpose of business or profession. However, the explanation appended to this sub-section denies claim of any such expense, if the same has been incurred for a purpose which is either an offence or prohibited by law.

Thus, the claim of any expense incurred in providing above mentioned or similar freebees in violation of the provisions of Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 shall be inadmissible under section 37(1) of the Income Tax Act being an expense prohibited by the law. This disallowance shall be made in the hands of such pharmaceutical or allied health sector Industries or other assessee which has provided aforesaid freebees and claimed it as a deductable expense in its accounts against income.

4. 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 Assessing Officers of such medical practitioner or professional associations should examine the same and take an appropriate action.

This may be brought to the notice of all the officers of the charge for necessary action.

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Category : Income Tax (25163)
Type : Circulars (7511) Notifications/Circulars (30306)

0 responses to “Gift, Hospitality, Cash to Doctors not allowable – CBDT”

  1. maheshdesai says:

    the cost of medicines is a market proposition; Manufacture of reliable generic medicine available at appropriate price be the target of the rulers; ( remember all govt. controlled manufacturing plants-from electricity to antibiotics to vehicle ); passing the buck of non governance by shifting responsibility on others to target a particular group of citizen is very good ethical noble professional political approach
    –for Indian Co.- opening door to grey marketing;
    for mnc- other unused way so far will be opened;
    agents, free cash or kind have to be everywhere;
    medical,legal & ca have ethics to maintain; ? noble prof.;
    rulers, officers are free to take & give ,reason ? no ethics therefore ? other than noble;
    the present mci is extension of a government enjoying allegations of huge graft; under that pressure Hon. CBDT ( in absence of democratic parliamentary process & sanctity ) calling the tunes of whims of politicians( who have been utter failure in their respective states& being out of power in their own state ,sharing heaping frustration on hapless ,helpless better qualified professional) with holier than thou attitude; with some haywire schemes to provide health care.-rural folk can be happy with malqualified professionals; corporate hospitals can flourish; rulers can always go to USA for treatment -where LAWS ARE VERY STRICT FOR MODERN SCIENTIFIC PRACTICE WITH ONE CURRICULUM & SYLLABUS WITH VERY STRICT IRS LAWS FOR FREEBIES ( the same country company can always lobby with the rulers without any consideration)
    the cost of medicines is a market proposition; Manufacture of reliable generic medicine available at appropriate price be the target of the rulers; ( remember all govt. controlled manufacturing plants); passing the buck of non governance by shifting responsibility on other to target a particular group of citizen is very good ethical noble professional political approach

  2. Ashok Shah says:

    Strictly speaking, if such expneses is disallowed in hands of the pharmaceutical companies and is taxed there, then it should not be taxed in the hands of medicla practitioner as it amounts to double taxation.

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