Essential Income Tax Provisions for Medical Doctors

Medical Doctors' Profession is among the noblest and busy professions. Having said that does not mean that they are spared from filing income tax returns (ITRs).

Here is the summary of the legal and documentation requirements for the medical doctors in India as per the Income Tax Act, 1961 and amendments thereof, implementation of which may help in avoiding payment of unnecessary taxes, interests and penalties.

Books of Account: Section 44AA read with Rule 6F, mandates the maintenance of books of account for the medical doctors for the Income Tax purpose, where the Gross Receipts / Collections exceed INR 1,50,000 per annum. Books includes the following:

1. Cash Book (For Cash System): A book in which receipts and payments of money are recorded OR Journal (For Mercantile System): A record of the financial transactions in order by date.  
2. Ledger: An accounting book that facilitates the transfer of all journal entries in a chronological sequence to the individual accounts. 
3. Issued Bills: Carbon copies of all the issued bills exceeding INR 25 needs to be maintained (whether machine numbered or otherwise serially numbered).
4. 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 INR 50, payment vouchers prepared and signed by the person. All the expenditure bills (with some exceptions) claimed while computing the income, are to be mandatory paid by account payee cheque / draft or electronically, if the payment exceeds INR 20,000 as per section 40A(3) of the Income Tax Act, 1961.
5. Form No. 3C: Maintain this form as a daily case register.
6. Inventory Record: 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/her profession.

Record Tenure: The books of account and other documents should be kept and maintained for a period of six years from the end of the relevant assessment year. A penalty for non-maintenance of books of account is INR 25,000 as per section 271A of the Income Tax Act, 1961.

Accounts Auditing u/s 44AB: If the practicing medical doctor achieves a gross fee collection of INR 25,00,000 (Revised to INR 50,00,000 for FY 2016-17 & onwards) or more during the financial year, then books of account need to be audited by the practicing Chartered Accountant. As per section 271B of the Income Tax Act, 1961, on non-compliance, a penalty of INR 1,50,000 or 0.5% of gross receipts (whichever is lower) is applicable.

Due Dates:

• Normal ITR Filing: July 31st Every Year
• ITR Filing with Audit: September 30th Every Year

Note: 

1. For the Individual, HUF and Partnership Firms where gross receipts are below INR 50,00,000, Presumptive Tax Scheme u/s 44AD is available w.e.f. FY 2016-17 as an option to reduce the compliance burden on maintaining books of account and tax audits, by simply paying 50% of the gross receipts or total income assessed, as income tax.
2. If the anticipated annual tax liability is more than INR 10,000, then the advance tax is required to be paid. The due dates for the advance tax are 15^th September, 15^th December and 15^thMarch with payments of 30%, 30% and 40% respectively. If the advance tax is not paid fully or partially within the due dates specified, an interest @ 1% per month is payable, u/s 234C & u/s 234B of the Income Tax Act, 1961 (as applicable).

- The author is an ITD Certified ITR Filing Practitioner reachable on agarwal.tanmay@gmail.com.

Time Wasters

"Time Wastage" means time spent by someone on non-productive activities or that do not serve any useful purpose.

In day to day life generally, one may not waste his/her time knowingly on any activity(s) that do not serve any purpose. However, there could be certain factors that may crop up during useful or productive activities, which may lead to wasting of the time. These factors may be termed as "Time Wasters", which may be generically applicable everywhere, or may be specifically applicable. 

Below are some of the key time wasters that are not classified for any specific duration or for any location (like office or home):

Interruptions: It means when a person is involved in some activity and some external agency (living or non-living) attempts to get the attention of this person on an another activity that is unrelated to the original activity hampering to the progress of the original activity that was being carried out by the person, then that another activity is an interruption for the person involved in the original activity. Examples of such interruptions could be the ringing phone, barking of a dog, doorbell, loud music in the neighborhood, etc.

Unclassified Task: When a person involves him/herself randomly on a task that has not been classified for some priority criteria, which may have been judged on the basis of Urgency and Importance, such a task is a time waster unclassified task. For example, if a person has to go to the office, or has to prepare food, or has to clean the bookshelf, or checking social media messages, or has to read a book. S/he needs should prioritise these tasks on the basis of urgency and importance. However, if s/he randomly selects one of these activities, there is a likely possibility of selecting a wrong task, leading to time wastage.

Dis-organised Place: If the place of carrying out the activities is not organised in a specific manner, it may lead to extra time involvement for searching an item, which may to the spending of extra time then the regular time needed to search that item. Then such a place poses to be a time waster.

Unnecessary Breaks: If the time gaps taken during the execution of an activity are more than the required gaps in terms of count &/or durations, then such breaks pose to be time wasters. For example, checking social media messages, coffee breaks, etc.

Social Media Messaging: If a person involves him/her regularly on checking and posting the messages on the social media like Whatsapp or Facebook, etc. in an uncontrolled manner, then such messaging becomes a time waster.

Chit-Chats: If the person involves in chit-chats with some person or group, in-person or over any other medium like telephone or group discussion, which is expected to lead no constructive results, such chit-chats may be considered to be time wasters.

Miscellaneous: There could be other time wasters that may or may not be appreciably considered as time wasters. Such as ineffective multitasking of the activities, unnecessary travelling, extensive socialisation, unwanted/unnecessarily putting own views in some other person's matters, etc.

- The author is a management professional reachable on agarwal.tanmay@gmail.com.

Importance of ITR Filing After 31st May Every Year

Though, Indian Income Tax Department (ITD) may introduce the Income Tax Return (ITR) forms for the previous year in the month of April itself. The usual last date of filing ITR is generally 31st July for the individuals (not auditable u/s 44AB). 

People may start filing ITRs from the month of April. However, there are certain benefits of filing ITRs after 31st May, especially for the salaried people, where employer issues Form-16 (Form-16A for professionals / others) and TRACES generated Form-26AS forms the basis for filing the ITRs.

Form-26AS is a statement of TDS deducted by the employer(s) or financial institution(s) or any deductor(s) who had paid some taxable amount to a person / entity for his / her / their services / products and had deposited in the ITD as per the prevailing IT laws. The credit of TDS in Form-26AS is reflected only after the filing of TDS returns by the employers / institutions / deductors.

These days Form-16 & Form-16A are directly generated from ITD TDS website known as "TRACES" after the filing of TDS returns by the employers / deductors. The due date of filing TDS returns for the January to March quarter is 31st of May. Therefore, one may not get his / her Form-16/16A from the employer before 31st May. So, it also means that one may not get the updated TDS entries in his / her Form-26AS before 31st May.

If one files his / her ITR before 31st May, it might be a possibility that there could be some differences in the TDS reflected on Form-26AS with the TDS depicted in the salary / payment slips. This could lead to the issue of notices u/s 143(1) issued by ITD stating the mismatch of TDS claimed in the ITR and TDS entries available in Form-26AS. This could further result in demand of tax and interest by ITD from the taxpayers. 

So, the ideal duration to early file the ITRs without last minute rush is to file between 01st June to 15th July every year.

File your ITR well in time and relax!

- The author is an ITD Certified ITR Filing Practitioner reachable on agarwal.tanmay@gmail.com.