ITAT rules consultant doctors’ remuneration not salary, exempts it from TDS

The ruling clarifies that payments made to these professionals should be categorized as professional fees instead of salary, potentially resulting in lower tax liabilities for both parties involved


The Income Tax Appellate Tribunal (ITAT) in Chennai, India, made a significant ruling recently. The bench held that remuneration paid to consultant doctors is not considered salary and thus not subjected to tax deduction at source (TDS). The appeal was filed by the revenue against the order of the commissioner of income tax (Appeals) CIT(A) in response to an issue arising from the assessee.

The case dealt with the classification of payments made to consultant doctors by a healthcare establishment. The question before the tribunal was whether such payments were considered salary or professional fees, as the two are treated differently under the Income Tax Act of India. 

The ITAT observed that the consultant doctors were not employees of the healthcare establishment and were instead engaged as independent contractors. The payments made to them were for professional services rendered, which were not in the nature of salary. As a result, the bench held that TDS was not applicable on the remuneration paid to consultant doctors.

This ruling by the ITAT in Chennai sets a precedent and could have implications for other healthcare establishments and their consultant doctors across India. It provides clarity on the taxability of payments made to such professionals, which can now be treated as professional fees instead of salary, leading to a potential reduction in tax liabilities.


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