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.
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),
♠ 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)
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)
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
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.
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(Republished with Amendments by Team Taxguru)