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If you are a medical expert in India, a little financial planning can help you gain access to tax benefits for doctors and save money. If your annual income is over INR 2.5 lakh, you need to maintain a ‘books of account’ for taxation. As a doctor, you can avail of some benefits while filing your taxes. You just need to learn how to claim these benefits.
One of the downsides of being a busy professional is to lose track of your income and finances. You might even miss opportunities to save on your taxes. As a medical professional, you need to be aware of taxation rules and regulations that are applied to you. Following them is important for not only paying your taxes correctly but also availing of the relevant benefits.
Before you know about the benefits, you need to learn about the documentation that you must maintain as a doctor.
Income tax for doctors in India has to be paid annually. Under the income tax deduction Section 44AA, it is mandatory for doctors to maintain a book of accounts, which is required for taxation purposes. However, tax is applicable only for those doctors who earn above INR 2.5 lakh every financial year. The book of accounts must include a cash book, ledger, journal, and copies of any bill exceeding INR 25.
If your income for a financial year is over INR 50 lakh, you must hire a professional chartered accountant to audit your book of accounts. Failing to do so will result in a penalty of INR 1.5 lakh under Section 271 B of Income Tax Act. The last date of filing your income tax, in case your book of accounts is required to be audited,is September 30.
‘Presumptive Tax’ is an important aspect involved in tax benefits for doctors. If your receipts show that your annual income is less than INR 50 lakh, you can consider paying
‘Presumptive Tax’. In this case, your income is assumed and it can be 50% of the receipts. It is not mandatory for you to report your actual income if you opt for ‘Presumptive Tax’.This scheme was introduced in the Financial Year 2016-17 and it is available for individual doctors practicing in India.
Other than the benefits of not having to keep any accounts-related records, another plus point of paying ‘Presumptive Tax’ is that the penalty under Section 271B of Income Tax Act, 1961 is not applicable to you. This can help you save up to INR 20,000 that you would have paid as fees to a Chartered Accountant or an auditor.
It is advised that you maintain some records of your accounts even if you are paying ‘Presumptive Tax’. Paying professional tax for doctors requires you to have a clear idea about your income and the books of accounts help with that.
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