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Doctors and Hospitals on the income tax radar: Covid-19
Doctors and Hospital are on the income tax radar and the impact would be visible after the current pandemics situation comes to an ease. There are a lot many complaints and tax evasions that are filed with the income tax department for excessive charging during the current phase of the pandemics.
The complaints received by the income tax departments are on various fronts & sources:
- The hospitals have refused to accept the payment in digital mode.
- The hospitals are charging heavily which is against their normal rate and the rates fixed by the local municipal authorities
- The hospitals have even refused to issue the receipts to the patients.
- The hospitals are fabricating the records so as to charge excessively.
- Though the cashless policy is there with the patients, still the hospitals are not accepting it as they are very well aware of the charges levied excessively by them.
- There are many people who were the relatives of the income tax officers and have paid enormous amounts to the hospitals. They have also reported the transaction to the departments.
In view of the enormous complaints by the citizens, the income tax department has also undertaken their preliminary investigation. The department has also carried out the video recording so as to take the issue for income tax raid and survey at an appropriate time.
The investigation by the department includes obtaining the receipts of the patients wherein cash is accepted by the department and the patient has filed the complaint with the department suspecting tax evasion.
Taxpayers may note that the acceptance of Rs. 2 Lakh or more in cash is also an offence u/s 269ST of the Income Tax Act- 1961. The fine for cash acceptance is 100% of cash acceptance in such cases. How section 269ST operates, one may know about it at “Forget genuineness, accepting cash of Rs. 2 Lakh and more attracts Penalty: Courtesy- Section 269ST”
Accessible at – https://thetaxtalk.com/2018/03/22/section-269st/
It may be noted that the tax laws have changed in such a way that the cost of penalty and fine is more than the cost of the tax. Further, the recent action by the department proves that the Government & the department is after “prosecution” and not only concerned by tax and penalty alone. Even smaller cases of tax evasions are treated very stringently by the department. The tax administration in the developed nation is acting tough against tax evasion and India is on the same footsteps.
The question arises as to how the department can establish tax evasion in such cases. Is it not a tough task even if there are no papers, records & documents at the hospital premises in such cases?
One must understand that the departments have their own mode of working and establishing tax evasion in such cases. Citizens may recall the period of demonetization wherein huge amounts of cash was accepted by jewellers & few businessmen at those times. Despite due planning by all such taxpayers, the department was able to establish the trail and the taxpayers were asked to pay income tax @ 78% and not 30%.
In the present case of doctors and hospitals, the following mechanism can be used by the department to track the cases of tax evasions:
- Camera / Video recording of the patients in the hospital during the period of pandemics.
- Reporting of the vacant bed to the local authorities by the hospitals the positions. It may be noted all the collectors/ local authorities are collecting the data on a daily basis from the hospitals.
- The registers/ entry records maintained by the hospitals.
- Cross examination of the fees/ charges received by the hospitals from the patients. In such cases, the summons is issued to the patient and they are asked to confirm the amount of charges/fees paid by them. This is also used to verify whether the patients have also paid the amount from their recorded source only.
- Cross examination of the patient records vis-a-vis records of pharmacy, pathology, radiology, & other facilities available in the hospitals.
- Payment of fees to the in-house or visiting doctors/ Nurse in the hospitals.
- Recording of the Statements of the staff and team of the hospitals regarding the charging of fees, collection of charges, etc.
There is no smoke without fire. If the fire is there, smoke is going to be there. This is what the department has proved in the past. This is the time when taxpayers have to be honest in declaring their income and maintaining the transparency in the transactions. Let us pay what is due to the Government. Peace of Mind is better than Money now. At lease in view of the latest tax laws & technology wherein it is easy to establish the tax evasions instances.
Hold on for the next move of the department.
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