Budget 2022 prohibits pharmaceutical companies from deducting gifts to doctors


By law, pharmaceutical corporations cannot deduct physician gifts from their profits in 2022.

It will no longer be possible for pharmaceutical companies to claim tax deductions for gifts provided to physicians under the Budget 2022.

As long as there is no legislation prohibiting pharmaceutical companies from giving physicians with remuneration, the practice has persisted since the Medical Council of India issued a policy more than 10 years ago that prohibits such payments.

For the first time, pharmaceutical corporations will no longer be eligible for tax deductions for the price of gifts and charitable contributions they provide physicians.

Tax reforms and other measures were included in the Finance Bill 2022, which was introduced by Finance Minister Nirmala Sitharaman on Tuesday.

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What is the best approach for the doctor to take?

In December 2009, the Medical Council of India adopted a code of ethics that prohibits physicians from accepting any kind of gift, aid (travel), or hospitality for any reason. In the study, physicians may be encouraged to provide treatments that are either unnecessary or unsuitable for their patients.

It’s been brought to our attention by the Central Board of Direct Taxes that physicians who receive gifts from pharmaceutical corporations must report an equal amount as taxable income. Expenditures on doctors are expected to be included in annual financial reports by corporations.

There is no law that prohibits pharmaceutical companies from giving gifts to physicians, so this practice continues, although in a more covert manner..

Although tax inspectors have refused to recognise them as valid business expenses, industry sources say these payments to physicians are being claimed as legal business charges by companies.

Exercising more prudence

Lawsuits have been filed by pharmaceutical corporations because of the government’s inability to remove them from deductions.

For the sake of clarity, a new explanation has been suggested to clarify that “expenditure incurred by an assessee for any purpose which is a crime or which is banned by law” means “expenditure incurred by an assessee for any reason that is an offense or which is prohibited by law.”

The medical ethics community said that although this is a positive step forward, the finance minister might have made even more progress by exercising more prudence. Medical ethics editor Dr. Amar Jesani stated that “the industry should have been ordered to reveal the names of all doctors and other health workers who have received such payments, as well as the amount of money received and to make these names available to the National Medical Commission for action.”

While physicians are prohibited from taking gifts under the medical code of ethics, pharmaceutical corporations have been free to do so, according to S Srinivasan, co-convener of All-India Drug Action Network (AIDAN), a patient rights advocacy group. According to Srinivasan, it’s a major source of worry.

It has been a long time coming, he says, “many of us have been lobbying for such legislation to put an end to unethical marketing by pharmaceutical firms,” To prevent physicians from being given presents, the government has lobbied for a voluntary regulation, but no pharmaceutical firm supports a legislation, as reality shows.

On the other hand, Dr. Chandra M Gulhati, editor of the Monthly Index of Medical Specialties, voiced fear that the medical industry may develop a new, more imaginative method to bribe physicians in the future.

“Incorporating international laws into the amendment would only minimally ameliorate the situation,” the author writes. Through the employment of third-party intermediaries, Indian producers operate in unregulated marketplaces. Keeping them under control will be a challenge. In countries with strict regulations, like the United States and Europe, bribery is almost non-existent, according to one expert. When it comes to using the parallel economy to get things done that can’t be done in any other manner, “good, old black money” will always remain in India, according to the professor.

Section 37 of the Indian Medical Council Act states that “the legal position is clear that any expense incurred in providing various benefits in violation of the Indian Medical Council (Professional Conduct, Etiquette and Ethics Regulations of 2002) shall be inadmissible under section 37 of the Act.”


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