The Medical Council of India had earlier laid down, in its code of Conduct to medical professionals, certain conditions, in the matter of accepting freebies from Pharma Companies. As per these instructions the medical professionals will be charged income tax on the cost of freebies accepted.

Deviating from this ruling, now the income tax appellate tribunal (ITAT) has allowed the respective pharma companies to claim tax benefits against funds spent on sponsoring vacation trips to doctors, providing them with costly journals and supplying, calendars/ diaries etc.,

In its decision on 12th January 2017, the tribunal has allowed the claim of PHL pharma to deduct Rs. 23 Crores spent on the above items, with break up as follows:-

The form has spent Rs.7.62 Crores for offering customer relationship/ management expenses, which include sponsorship of Medical seminars, accommodation of travel and subscription costs for journals.

Key account management expenses (Promoting a range of products among key doctors) worth 2.57 crores and free medical samples bearing “not for sale” mark worth 3.60 crores.

While the central Board of direct taxes said that the deductibility, violates the code of conduct, the ITAT says that the code is not for pharma companies. It has termed the expenditure as business expenditure.

The order of the ITAT had been received with dismay by consumers who were enthused by the earlier order and viewed them as nipping in the bud, the distribution of gifts in return for favors from the medical fraternity.

The ITAT says that the code of conduct by the Medical council of India debarring the freebies, was one meant to be followed by doctors and not pharma companies.

Consumer activists all over the country see this as a handle for unscrupulous forms, allowing such inducements. The medical profession already riddled with more number of scans and medical negligence hail this order, since this will deepen the nexus between doctors and pharma companies.

Courtesy: Times of India 16th January 2017

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