Foreign junkets, gifts and even home décor from pharma companies to doctors will now come under the tax scanner.
A recent circular by the Income Tax department says freebies provided by pharmaceutical companies, diagnostic centres, and others in medical business will be treated as business income of doctors.
The step comes on the basis of the amendment in rules made by Medical Council of India in the Indian Medical Council (professional conduct etiquette and ethics) Regulations 2002 prohibiting doctors from taking gift, travel facility, hospitality, cash or monetary grant from the pharmaceutical and allied health sector industries.
“It is also clarified that the sum equivalent to value of freebees enjoyed by the aforesaid medical practitioner is also taxable as business income or income from other sources. The Assessing Officers of such medical practitioner or professional associations should examine the same and take an appropriate action,” says the circular. Doctors are given facilities such as free family trips to places of their choices, both domestic and in international tourism circuit.
In return, doctors generally prescribe medicines of the companies that send them on such trips.
“Taking favours in cash or kind from a pharma company means the doctor will be under undue pressure to extend favour by prescribing company's medicines unnecessarily. This is a crime in a way,” said Dr Sameer Mishra, faculty with the King George's Medical University.
Cuts against tests such as MRI and CT Scan are up to Rs. 1000 per test while for pathological tests it is up to 10% of the cost of the test.
Though freebies and cuts are paid by the companies to the doctors, the ultimate burden comes on the patient.