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Consolidated pay tax treatment

Amit Gupta (Employee) (128 Points)

12 July 2010

Hi,

I am dentist and work as lecturer in dental college. I get consolidated pay. College does not deduct any PF or so.

1) Will my income be considered as professional income?

2) Will I have to pay service tax on my income?

3) If I buy a car and use it for commuting, then, Can I deduct EMI from my income as expense?

Thanks in advance.

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6 Replies

Amir (Learner) (4016 Points)
Replied 12 July 2010

Hi Dr. Amit.,

Non deduction of PF is just an indication and not a conclusive thing to decide whether you are getting salary or consultation fee.

I would say, confirm this thing from your Hospital only that whether they are treating you as an employee or a consultant.

Now ur other questions -

1) In case of a consultant, the receipts/income will be treated as Professional receipts.

2) Service tax is not applicable to Doctors in general, even if u r being treated as consultant.

3) Car's EMI -

If salary - then no deduction will be allowed in respect of car's EMI

if consultant - then interest will be allowed as deduction & depreciation @ 15%shall be claimed (due consideration should be given to dis allowance on account of personal use)

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Amit Gupta (Employee) (128 Points)
Replied 13 July 2010

Hi,

Is that mean that I can recieve salary with PF too?

My understanding was that PF is always dedcuted from salary.

Also , apart from interest my expenses on buying car will be considered as expense toward professional income. Am I right?

Regards and thanks a lot

Amir (Learner) (4016 Points)
Replied 13 July 2010

Hello Dr.,

I meant that it is not necessary that PF is applicable on the Hospital. Further, in some cases the deduction can be optional.

So, just confirm it to be on safer side.

Dr. can you clarify what type of expenses?

If it is revenue in nature then Yes the same can be claimed under head Business/Profession otherwise you will have to capitalize them & claim as Depreciation.