In India, doctors and other medical professionals who are self-employed taxpayers, or “assessees,” are those who derive their revenue from their practice and services rather than from a fixed income or salary from an employer. It makes sense that managing the financial facets of the healthcare profession would fatigue medical professionals.
The MPVD & Associates CA firm in Kolkata has been working with a variety of methods to simplify the bookkeeping and accounting requirements for medical professionals so they can maintain a clear and organised financial profile at all times. This article jots down some of the important insights on the topic.
How Income Tax Works for Medical Professionals in India
Section 44AA of the income tax returns for doctors governs the deductions for medical professionals and doctors. Although it is advised that everyone with a steady income should file for their taxes, the tax deduction only applies to those with an income exceeding INR 2.5 lakh in a fiscal year.
It’s essential to keep your personal and professional finances separate if you’re a doctor or other self-employed medical practitioner. Open a separate business bank account to keep track of all earnings and outgoings.
The book of accounts must include the cash book, journal, ledger, and copies of any bills costing more than INR 25. The whole thing is conglomerated in the book of accounts and receipts for Taxation. As a doctor, you can take advantage of a variety of income tax deductions. With the help of MPVD & Associates bookkeeping & accounting services in India, you can further simplify the whole process by sending over all copies of your professional bills and maintaining one cohesive format for all payments.
The Presumptive Taxation Scheme for Indian Medical Professionals
Presumptive taxes are a relatively new idea in India and it affects self-employed taxpayers, including those in the medical field, who earn less than Rs 50 lakhs annually.
Your income is “presumed” if you choose this tax plan, and the actual profit is not calculated. You can anticipate that 50% of your receipts will represent your profit.
The best thing about this program is that you can participate even if your profits exceed 50% of your receipts. However, you would end up saving a sizable sum in taxes if your receipts are less than Rs 50 lakh and your expenses are less than 50% of your receipts.
Calculating Gross Receipts and Preparing for Account Audit
Gross receipts are a measure of the total amount of money received for professional services provided during the fiscal year.
The norms for “gross receipts” are still quite obscure in the Indian income tax guidelines, but a tax audit is mandatory on the occasion of the following situations:
- When the total amount from gross receipts exceeds Rs. 50 lakhs in a financial year.
- When total income exceeds Rs. 2.5 lakhs, gross receipts are lower than Rs. 50 lakhs and profit less than 50% of gross receipts.
Taxpayers must keep a record of all receipts collected directly through their practice to compute their gross annual receipts. For a medical professional, this includes keeping a record of all the money made through treatments, consultations, diagnostic work, and other professional services.
Dealing with a variety of rapid transactions is not only difficult for someone who is trying to save other people’s lives, but it also limits their availability at work. They consequently require a streamlined procedure to monitor gross receipts and prepare for an account audit.
With our customized tax and accounting solutions for Indian medical professionals, MPVD & Associates can help with that. Call us if you want to simplify your tax-related responsibilities, and we’ll figure out how to do it all efficiently and affordably.