Taxability of hospitals

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vikas garg (Querist)
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22 June 2012 Whether income of hospitals is 100% exempt from tax for 5 years, if yes, then under which section. Hospital is a company registered under company act.

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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25 June 2012 is the hospital Registered as Non profit Company ??

vikas garg

vikas garg (Querist)
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25 June 2012 no saurabh ji, hospital is not registered under section 25 of the company act.

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CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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25 June 2012 A hospital can cliam exemption under Section 10(23C) (iiiae)
IF any hospital or other institution for the reception and treatment of persons
suffering from illness or mental defectiveness or for the reception and treatment
of persons during convalescence or of persons requiring medical attention or
rehabilitation, existing solely for philanthropic purposes and NOT FOR THE PURPOSE OF PROFIT, if the aggregate annual recepits of such hospital or institution do not exceed RS. 1 Crore.

OR can claim Exemption U/s 12
by getting Registration U/s 12A
as NGO

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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25 June 2012 Also it can claim exemption U/s 80IB
(11C) The amount of deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital located anywhere in India, other than the excluded area, shall be hundred per cent. of the profits and gains derived from such business for a period of five consecutive assessment years, beginning with the initial assessment year, if–

(i) the hospital is constructed and has started or starts functioning

(ii) the hospital has at least one hundred beds for patients;

(iii) the construction of the hospital is in accordance with the regulations or bye-laws of the local authority; and

(iv) the assessee furnishes along with the return of income, a report of audit in such form and containing such particulars, as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation to sub-section (2) of section 288, certifying that the

deduction has been correctly claimed.

Explanation.— For the purposes of this sub-section,—

(a) a hospital shall be deemed to have been constructed on the date on which a completion certificate in respect of such construction is issued by the local authority concerned;

(b) “initial assessment year” means the assessment year relevant to the previous year in which the business of the hospital starts functioning;

(c) “excluded area” shall mean an area comprising–

(i) Greater Mumbai urban agglomeration;

(ii) Delhi urban agglomeration;

(iii) Kolkata urban agglomeration;

(iv) Chennai urban agglomeration;

(v) Hyderabad urban agglomeration;

(vi) Bangalore urban agglomeration;

(vii) Ahmedabad urban agglomeration;

(viii) District of Faridabad;

(ix) District of Gurgaon;

(x) District of Gautam Budh Nagar;

(xi) District of Ghaziabad;

(xii) District of Gandhinagar; and

(xiii) City of Secunderabad;

(d) the area comprising an urban agglomeration shall be the area included in such urban agglomeration on the basis of the 2001 census.’.

This amendment will take effect from 1st April, 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years.