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,

Income Tax Provision for Doctors

♠ 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. 50, 00,000 (Fifty 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)

Due Date:-

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

b) Audit Case: 30th September of the Year

Note: Due to COVID-19 pandemic, the due dates for FY 2019-20 has been extended as follows:

a) For Filing Income Tax Return: 30th November, 2020

b) For Tax Audit: 31st October, 2020

Presumptive Tax Scheme for Professionals (Section 44ADA)

This facility of Presumptive taxation for professionals has been introduced by Finance Act, 2016. This scheme is available to Resident individuals and HUF. Only those who have annual receipts of Rs 50lakhs or less can opt for this scheme. If your annual receipts exceed Rs 50 lakhs, you must report them and deduct actual business expenses to compute profit or loss. Those who opt for presumptive taxes do not have to compute or report actual profits. You can assume your profits to be 50% of your receipts. But remember, if you claim your profits lower than 50% of receipts and your total income is taxable i.e. it exceeds Rs 2.5 Lacs in such a situation, you will have to maintain books of accounts and get them audited as well.

For those who opt for presumptive tax scheme, not required to pay advance tax in instalments; paying entire tax dues by 15th March of the financial year will suffice.

Further, most important think i.e. unlike Section 44AD, there is no restriction for presumptive taxation for professionals. They can claim it one year and then opt out and then in the following year opt in again.

To conclude, I will say as doctor’s always mentioned

“Self-Medicine is dangerous to health which doctor discourages to every patient. Just like that Self –Tax planning is also not advisable Hence taking assistance of tax professionals will always help them to reduce their burden related to tax compliance.

(Author can be reached at msinghal33@gmail.com)

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(Republished with Amendments by Team Taxguru)

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15 Comments

  1. Dr siddharth Mittal says:

    I was doing my M CH at KGMC Lucknow and for 4 months i received salary under sec 192 but lator i joined various hospital and is getting under 194 J. Suggest if both income can be clubbed to take benefit under presumptive scheme

  2. Jaggu singh says:

    We require consultant receipt as per form 3c from doctor for Mediclaim but doctor refuse to give form 3c so now unable to claim for consultant charges incase if I claim with consultant receipt only then also it will get rejected because it should be according form 3c so now please suggest how to claim my consultant charges of rs 300

  3. A. Mishra says:

    Receiving income from a pvt Hospital on hourly basis and the payment made monthly. They also deduct 10% TDS on income. Under which section it will come. Can I treat as salary or professional income. Can I avail presumptive tax benefits. Please clarify

  4. samir says:

    Good evening Mr Mohit,
    As a govt doctor, my salary is 6 lakhs PA. Private practice is 18 lacks PA from telereporting, all get through cheque. As expenses (like assistant fees, mobile, driiver, internet etc etc) for my pvt practice, how much may I show out of 18 lakhs? My man says it only 25 % !! Thanks in advance.

  5. k k shetty says:

    my daughter is working as associate consultant with a corporate hospital with monthly retainer fee of Rs.1.50 lakhs. what are the deduction available to her as professional

    1. k k shetty says:

      my daughter is working as associate consultant with a corporate hospital with monthly retainer fee of Rs.1.50 lakhs. and tds is made u/s 194j what are the deduction available to her as professional and can she file return in itr1

  6. vk says:

    Sir
    I am running my own registered hospital as well as getting consultancy fees from outside
    Will this be considered as business + profession = 1cr+ 25 lac limit for audit

  7. Varun says:

    Hey,

    I am a respiratory doctor purchasing a Bronchoscope for my private practice. Can I claim some Tax Deductions on this Asset Purchase? or a Personal loan who’s interest component is tax free?

  8. rama says:

    i am a dentist having private practice. Should i calculate tax from gross receipt or as a salary?. I am paying rent, EMI, clinic consumables. While calculating can i deduct those items?. What are the exemptions and deductions?
    thanks is advance

    1. SANKI AGARWAL says:

      There are five heads of income salary will go under head salary and ur practice is pgbp income, as per provisions of 44ADA u can take income as 5o% of gross receipt without any deduction or in normal course as receipt minus business related expenses minus deduction

  9. chandan says:

    Hi Mohit, pl clairfy in case both consultancy fee & salary is 10 L PA and 42 K TDS dedn 1) is presumptive basis beneficial or regular one 2) Form Nos applicable for both 3) exemptions / deductions eligible for regular with books maintained

    1. CA Mohit Singhal says:

      Hi Chandan,

      1. Under Presumptive, Only 50% of your gross receipt is taxable as an income under Income Tax as consulting business while getting Income as salary will attract normal provision of income tax on salary .

      2. ITR-4S(Presumptive Basis+Salary),ITR-4(Profession or Consultant ), ITR-1 (Salary) should be used as per the requirement.

      3. No deduction under presumptive basis.If books of accounts get audited by an chartered accountant ,then actual expenses incurred for getting income will eligible for deduction .

      For Further clarification feel free to contact us on fcasmc@gmail.com.

  10. chandan says:

    Hi Mohit, pl clarify in case both consultancy fee as well salary received is 10 Lacs PA with TDS dedn 45K, 1) is presumptive basis beneficial or regular 2) applicable Form No for both 3) respective eligible deductions in case maintaining books

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