Know all about Tax benefits applicable for Doctor. Check the income tax provision for Doctors. For more details read the following content.
Income Tax Provisions for Doctors
Doctor profession is one of noble professional in the society and helps the society to be a healthy. But this professional will not be spared and will be taxed as the income generated from his profession. Among the busiest of professionals, doctors have little time to learn about the latest tax. Being India’s Top 10 income earners, doctors have the need to give more attention to financial planning and taxation.
Here we are providing some legal requirements and necessary documentation for doctors in India as needed to follow to avoid additional payment of tax, interest, and penalty.
Income Tax Section 44AA read with Rule 6F
Section 44AA of Income Tax Act 1961 mandates the maintenance of books of accounts for the medical professionals for Income Tax purpose. Those Doctors whose Gross Receipt or Collection exceed Rs. 1,50,000/- per annum.
Required Books of Accounts
Let us take a look at accounts books required maintaining by the Doctors.
Doctor is also one of the professional who is covered u/s 44AA of Income Tax Act, which requires maintaining books of accounts if the doctor is in receipt of Fee or gross fee collection of more than Rs. 1,50,000/- during the year. It is mandatory as per the income tax act.
The penalty for non-maintenance of books of accounts is Rs.25,000.(As Per Section-271A of Income Tax Act).
Rule 6F of Income Tax Rules specifies that few books of accounts have to be maintained –1) Cash book, Journal, Ledger.
2) Carbon copies of bills (more than Rs. 25/-) and original statements of expenditure made, daily register and inventory.
These documents and accounts should be preserved for six years from the end of relevant Assessment Year.
If practicing doctor is having gross fee collection of Rs. 10,00,000 (ten lakhs) or more (15 lacks For AY 2011-12) during the previous year (April to March), then books of accounts should be audited by a qualified practicing Chartered Accountant.
Under section 271B, the penalty for not having the audit is 0.5% of the receipts or Rs. 1,00,000/-, whichever is less.
|4.||Tax||Section 139 of Income Tax Act needs filing the Income Tax return every year on or before 31st July (Non- Audit Cases i.e. gross fee collection is less than Rs.15,00,000/-) or 30th September (Audit cases i.e. total fee collection is more than Rs.15,00,000/-).|
|5.||Tax||If Annual Tax liability is more than Rs. 10,000/-, then tax is needed to be paid in advance. It can be called as self Tax Deduction at Source. TDS is the tax which employee will pay every month from salary. But for professionals, the due dates for the advance tax are – 15th September, 15th December and 15th March. They are required to pay 30%, 30% and 40% of Annual tax liability for the forthcoming A.Y.
If the tax liability estimated is Rs. 20,000/-, then the due dates for paying tax liability are
1) Rs. 6,000/- on or before 15th September.
2) Rs. 6,000/- on or before 15th December.
3) Balance Rs. 8,000/- on or before 15th March.
If the Advance tax is not paid within the due date as specified above interest at the rate of 1% per month till the next due date is payable. (As Per Section 234C of Income Tax Act).
If 100% of tax is not paid in advance, interest at the rate of 1% per month is payable from 1st April till the date of payment on the balance tax due. (As Per Sec. 234B of Income Tax Act).
If 100% of tax is not paid in advance and return is not filed in time, interest at the rate of 1% per month is payable till the date of filing the return of Income by paying 100% of the tax due on the return. (As Per Section-234A of Income Tax Act).
|7.||Hand Loan Taken||
As Per Sec. 269SS of Income Tax Act, “No person shall take or accept from any other person any loan otherwise than Account payee cheque or account Payee Bank Draft if the amount of such credit is Rs.20,000/- or more.”
If already any loan is taken during the current year or any earlier year and interest accrued thereon and any loan is accepted during the year, the aggregate amount of such loan is Rs.20,000/- or more, then also the Account Payee Cheque or Account Payee Bank Draft is must for such Loan.
|8.||Hand Loan Repayment||
As Per Section 269T of Income Tax Act, “In case the loan balance along with the interest thereon, on the date of repayment is Rs.20,000/- or more, then such loan has to be repaid through the Account Payee Cheque or Account Payee Bank Draft”.
|9.||Payments to Relatives||Nobody (including Income Tax Officer) will stop doctors paying salary or professional payment to spouse/relative for any service availed if it’s reasonable.
|10.||Business in the name of Spouse. (Unless Professionally Qualified).||
|11.||Payments more than Rs.20,000/-||If any expenditures like Medicine Bill, Vehicle Maintenance, and such other Payments are claimed as expenditure while computing the income, are to be mandatory by Account Payee Cheque or Account Payee Bank Draft, if the amount exceeds Rs. 20,000/-. (u/s 40A(3) of Income Tax Act 1961)|
|12.||Savings / Investments||As known to everyone, the tax can be saved by investing the amount in the eligible investments to the tune of Rs.1,00,000/-. The investments are like Insurance premium, House loan principal repayment, and Eligible Mutual Funds.etc.,|
|13.||MediClaim Policy Payments||Doctors also can purchase these policies and get the premium deducted from their total income up to Rs.15, 000/- on the life of the spouse, Children and parents as per section 80D. The deduction is in addition to Rs.1,00,000/- under section 80C. As Per Sec 80D “ the deduction is allowed only if Premium is paid through the account payee cheque, demand draft or the credit card/debit card.(Cash Payments are not Allowed).|
No charitable donations to N.G.O.’s will give 100 percent tax benefit. Tax saving from generous donations varies from 5, 10, or 15% depending on assessee’s Income tax slab rate.
For specified donations, Tax savings varies 10, 20 or 30 percent based on your tax slab rate.
Ex. If you donate Rs.100/-, you will get the maximum tax saving of Rs.15/-
Penalty for not Maintaining Books of Accounts
Under Section 271A of the Income Tax Act 1961, the penalty for non-maintenance of books of accounts is Rs. 25, 000/- (In words Rupees Twenty Five Thousand Rupees).
If practicing doctor is having gross fee collection of Rs. 25 lakhs (twenty-five lakhs) or more during the previous year (April to March), then books of accounts should be audited by a Chartered Accountant (CA) in Practice. In Union Budget 2016 an announcement is made that Rs. 25,00,000/- (twenty-five lakhs) has been proposed to substitute by as Rs. 50,00,000/- (Fifty lakhs) from Assesment Year 2017-18.
Under Section 271B of the Income Tax Act 1961, The penalty for non-complying with tax audit is Rs. 1,50,000/- (One Lakh Fifty thousand Rupees) or 0.5 % of gross receipt whichever is lower.
- For Non- Audit Case: 31st July.
- For Audit Case: 30th September.
Presumptive Tax Scheme for Professionals
Let’s have a look at Presumptive Tax Scheme for Professionals as per Finance Bill 2016 Section 44ADA.
This section is to be proposed only for Individual, HUF & Partnership firm to
- Reduce compliance burden for small professional (Like non-maintenance of books under section 44AA & no tax audit required if gross receipt not exceeds Rs. 50,00,000/-).
- To bring parity between small professional & businesspeople.
AND to tax income on the presumptive basis as HIGHER of 50 % of gross receipt or Total Income assessed.
As doctors always says
“Self-Medicine is dangerous to health which doctor discourages to every patient. Just like that Self -Tax planning is also not advisable.