Freebies to Doctors Considered as Taxable Income : CBDT

The Central Board of Direct Taxes (CBDT) has noticed that, some pharmaceutical companies are providing free samples of medicines, gifts, foreign trips to doctors or medical practitioners. Such freebies violate the regulations issued by Medical Council of India and hence shall be calculated as taxable income.

Under section 37(1) of Income Tax Act, expenditure from income will be eligible for tax deduction, if such expense is made exclusively for business purpose or profession. The CBDT stated that, as the amended guidelines of Medical Council of India (MCI) has made such free samples or freebies illegal and prohibited by law, this provision was no longer applicable in the industries of pharmaceutical and health care.

Drug makers are giving freebies to doctors in return for prescribing a particular company’s brand of drug over its competitors. Moreover, this expenditure is shown in the cost of medicines and borne by consumers.

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