Tax Benefits for Doctors in India (2024-25) Under the Presumptive Taxation Scheme

Presumptive taxation scheme (PTS)

One of the income tax benefits for doctors is that you can opt for the presumptive income tax scheme. Under the presumptive taxation method, your income is presumed. This implies that you can presume 50% of the total gross receipts for the year as your profits. If you choose to file your taxes under PTS, you do not have to report your actual profits. You are then taxed accordingly. However, to qualify for presumptive taxation, you need gross receipts of less than ₹50 lakhs in a financial year.

PTS was introduced in the financial year of 2016-17. Individual doctors, as well as those from Hindu Undivided Families (HUFs), can opt for this scheme. But the scheme is not open to an incorporated company or firm. Moreover, you need to be a resident of India to qualify for it.

Calculation of gross receipts under the presumptive taxation scheme

To calculate your gross receipts for a given financial year, you can consider your practice or job earnings. Sometimes, doctors may have other sources of income linked to their medical profession. This can include fees earned by giving lectures in medical institutes, writing articles or publishing papers in medical journals, and more. However, these do not qualify to be added to your gross receipts.

Income tax benefits for doctors under the presumptive taxation scheme

Here are some benefits of the scheme:

-No need to keep books of accounts:

-No need to pay advance tax:

Important points to consider while availing tax benefits for doctors under the presumptive taxation scheme

Here are some things to note:

- If you are a practicing doctor with gross receipts of more than ₹50 lakhs, you need to keep books of accounts. If not, you can be charged with a penalty of up to ₹1.5 lakhs under Section 271 B of the Income Tax Act of 1961.

- If your profit is lower than 50% and your total income for the year is more than ₹2.5 lakhs, you need to audit.

- Presumptive taxation is only applicable to the income earned from your medical services. Any other source of income is not included in the scheme.

- You can opt for PTS in any year. You can also choose not to opt for it for a particular year in between. The choice is entirely yours.

- If you choose PTS, you need to file your income tax return (ITR) with Form ITR 4.

Conclusion

The presumptive taxation scheme can be an effective tax strategy for practicing doctors in India. However, remember to keep all the terms and conditions in mind for enjoying its complete benefits. Besides this, you can also reduce tax with savings and investments, such as a comprehensive life insurance plan from a reputable brand name like PNB MetLife. Not only does this offer tax benefits but also secures your loved ones.

Find out more about tax savings life insurance policies for doctors and term insurance plans at PNB MetLife.

The above article on presumption tax is as per our understanding of tax laws and subject to change from time to time. Clients are advised to consult their consultants before taking any final tax position.

Tax benefits are as per Income Tax Act, 1961 & are subject to amendments made thereto from time to time. Please consult your Tax Consultant for more details.

The income tax is levied on all earning individuals who fall under a taxable income bracket. The income tax is paid to the Government of India and is charged annually. However, there are several tax deductions and exemptions that you can claim to lower your tax liability. The Income Tax Calculator helps you ascertain your tax output for a financial year based on your taxable income. This can help you plan well and save tax using the tax-saving deductions and exemptions, if possible.