The Hindu Business Line : Doc’s tax problem

I am a doctor. I have attended several conferences abroad sponsored by drug companies. I have got notice from the income-tax department asking me to pay tax on the value of benefit enjoyed by me at the expense of these companies. What should I do?

Dr Kamruddin, Trichur

Well, to my mind this is unjustified because the companies would have paid fringe benefit tax (FBT) on 20 per cent of the expenses incurred on conferences. The amount spent on conferences to the extent it relates to employees’ participation is to be excluded from the purview of FBT. Therefore, what are targeted are the expenses incurred for the benefit of outsiders like you. Now, having already got tax by way of FBT, the income-tax department cannot reach out to the beneficiary as well, even though the FBT regime contains an express provision to save employees alone from such double taxation.

But then those who are in business or profession cannot also be subjected to double taxation. Had there been no FBT on conference expenses incurred on outsiders, the department would have been perfectly justified in its stand. Therefore, I would advise you to reply to the notice on these lines. If the department does not relent you may have to appeal.

S. MURLIDHARAN

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