Proffessional paying taxes more than one head for remunerations recd?

saurabh sawlani (2191 Points)
Replied 22 November 2018

dear jyothis vijay,
if pharam company deduct your tds on your total income u/s 194j ( as you mentioned above) so it's obvisouly your proffessional income & it's added to your income ( which you recevied from employer 49 lakh) thus u cannot take advantage of section 44ADA anymore😊

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 22 November 2018

This is an edit of my original query...i have clarified on certian aspects to make the question more clear

I am a doctor. I receive proffessional fees from my employer and I pay taxes for it under section 44ADA. Now few pharma companies gets certain work done by me-like conducting clinical tirals, data collection work, taking CME classes for them (which usually involves a topic projecting one of the molecule produced the company), advisory board meetings etc etc. Please note that I am helping these companies to get an insight into the therapy chosen by medical professionals (by doing the CMEs). I help them in getting the insight. In the advisory board meetings, i am supposed to advice them and they seek my consultations. This is supposed to help them understand the areas of diagnosis and treatment. Thats what they say. In the end i feel those are all a fancy way to say that they are paying me to help them know treatment styles of various doctors and/or to promote their product indirectly. Anyway-While doing so I don't indulge in the usual "treating patient" job of a doctor. But indeed they are giving me this job only because i am doctor-its just that the job that i do for them do not involve what is generally considered that a doctor would do! Now my questions is-is it possible that I pay taxes for these remunerations under a head different from 44 ADA Illustration: I receive rs.49 lakh a year from my principle employer ..i pay tax under 44 ADA I receive rs.3 lakh a year from these pharma companies....can i pay taxes for ths amount under any head other than 44 ADA ?

(these pharma companies give me money under secton 194J)

PS: I know 44 ADA uses the word 'gross total receipts" and all. I know about the rs.50 lakh limit rule for 44 ADA. I know the straightforward option is to pay taxes for pharma remuneration under 44 ADA. I am looking for a legal loophole (if any)so that i may pay taxes for rs.49 lakh under 44 ADA and for the remainder rs.3 lakh under some other section I am sure , i know the experts in this field can see that if that rs.3 lakh is added to rs49 lakh, i can no longer use section 44 ADA.

I am very clearly and desperately trying to find a method to come out of this legally? (otherwise i have no option left but to forego the rs.3 lakh...ie to not accept it)

Kindly help

kindly also note...i am open to suggestions which include negotiating with the pharma companies to change 194J to some other section if that would help!! Its just that nature of payment will still remain the same as i explained in detail above

rama krishnan (12239 Points)
Replied 23 November 2018

Mr. jyothish, instead of doing all these things, it's very simple to maintain books (as such it's not complicate in respect of your nature of income) and audit your books and you can declare total income less than that if you would've declared under 44ada.

I don't understand why you are so much in particular about opting 44ada and why not under normal provisions?

2 Like

Nitesh bind (Student CA Final ) (12692 Points)
Replied 23 November 2018

Agree with Mr. Rama Krishnan.

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 23 November 2018

its obvious isn't it?

Unlike most other professionals, i can't claim much in terms of "expenses". By claiming presumptive profits via 44 ADA, i save a lot in terms of taxes.

If you have dealt with filing for people in my profession you would know. For most people in profession, expenses would not come to high amounts. Its not about maintianing books !

rama krishnan (12239 Points)
Replied 23 November 2018

@ dr. jyothish, I think you haven't gone through 44ada provisions in subtle. for your convenience,

44ADA. [1] Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who is engaged in a profession referred to in sub-section [1] of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession".

it's mentioned that minimum 50%
or sum higher than the aforesaid sum claimed to be earned by the assessee. so even if you opt for 44ada, if you have knowledge that you have earned more than the 50 percent of turnover then that sum have to be declared as total income. the only benefit in 44ada is that you no need to maintain books and audit them.

for expenses, you can bring in your car bike laptop desktop mobile phone as fixed assets and can claim depreciation . you can also claim maintenance charges for that fixed assets apart from fuel expenses. you can also claim travelling expenses attributable to the professional services rendered to the pharma companies. this is my humble view

1 Like

Nikhil Kaushik (Fellow CA) (85758 Points)
Replied 23 November 2018

Originally posted by : Dr.Jyothish Vijay
	its obvious isn't it? Unlike most other professionals, i can't claim much in terms of "expenses". By claiming presumptive profits via 44 ADA, i save a lot in terms of taxes. If you have dealt with filing for people in my profession you would know. For most people in profession, expenses would not come to high amounts. Its not about maintianing books !

It is not about maintaining books of accounts for sure. But here is the thing, 44ADA when applied to doctors is not restricted just to the fees received from patients. It includes all your professional receipts arising out of your work as doctor. the work the pharma companies get done from you is also on account of your professional qualification.

So once it goes above 50 lakhs, you are out of 44ADA for good. Just the downside of making more income.

Instead of trying to classify these incomes into different heads, you need to sit with a CA and do better tax planning.

Nitesh bind (Student CA Final ) (12692 Points)
Replied 23 November 2018

Dr. Jyothish as I see as are quite enthusiastic about 44ADA I could give you one suggestion... You could just route these Rs. 3 lakhs through any one of your fellow doctor (obviously who is your friend/family and is reliable) and whose Receipts are below such 50 Lakhs and later on you could adjust this amount in cash or some other means of transactions.

For this, all you have to do is just ask your Pharma Companies to make payment to your friend/family and deduct TDS in his/her name.

Apart from this, there is hardly any way out. And one more thing, once TDS got deducted in your name you can't get away with it. So you have to make sure that the Payment and TDS deduction both are through your such friend/family.

Nikhil Kaushik (Fellow CA) (85758 Points)
Replied 23 November 2018

Dear Nitesh,

You are still a student. Your advice here is to evade taxes (settling in cash). no wonder our profession requires NFRA!

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 23 November 2018

no...this matter has already been settled....its "deemed|" profits.....and its based on what i claim.Its only that it should be minimum 50%. Its not mandatory to quote higher profits.Thats the meaning of the word "Deemed"

|ts been settled right here in this forum multiple times....one example is my own thread

https://www.caclubindia.com/forum/can-section-44ada-and-44-aa-both-be-applicable-for-a-person--442346.asp?offset=1

Further there is this clarification from income tax authorities:

Manner of computation of taxable income in case of a person adopting the presumptive
taxation scheme of section 44ADA
In case of a person adopting the provisions of section 44ADA, income will be computed on
presumptive basis, i.e. @ 50% of the total gross receipts of the profession. However such person
can declare income higher than 50%.
In other words, in case of a person adopting the provisions of section 44ADA, income will not be
computed in normal manner but will be computed @ 50% of the gross receipts

Please note the usage of the word "can" here instead of "should". Its my choice. And anyway the second line clarifies it even further regarding how income needs to be calculated !!!

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 24 November 2018

For Rs.50 lakhs income i can quote rs25 lakhs as expenses using 44 |ADA. Are you saying that i can claim an amount more than rs25 lakhs as expenses by making use of depreciation and other stuff you mentioned?

I didn't think so.....but if i am wrong , kindly enighten me

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 24 November 2018

Yeah...my CA is out of ideas. In the past this forum has given me ideas better than my CA in some cases. I guess more brains is better than one

|He did suggest negotiating with pharma companies for giving payments using section 194C. But he says, though 194C is better than 194J, he is not sure whether it will still solve my issues(because he feels even after going through 194C, IT could still question if i put my income under two heads....but its just that routing through 194C gives me a better chance of winning the "argument"...In other words he feels though 194C is better, its still may not solve my problem )

Dr.Jyothish Vijay (Dr) (214 Points)
Replied 24 November 2018

Thanks for the suggestion. The route you mentioned will not help. Because i am only looking for solutions which are legal...and so are the pharma comapnies .....These are not under the table deals....I can only negotiate for solutions that are legal !!!

Nikhil Kaushik (Fellow CA) (85758 Points)
Replied 24 November 2018

Originally posted by : Dr.Jyothish Vijay
	For Rs.50 lakhs income i can quote rs25 lakhs as expenses using 44 \|ADA. Are you saying that i can claim an amount more than rs25 lakhs as expenses by making use of depreciation and other stuff you mentioned? I didn't think so.....but if i am wrong , kindly enighten me

You cannot claim anything beyond 50% deduction. Yes 80C deductions are allowed though but not deprecition etc