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NMC seeks details from the tax sleuths on medical practitioners who received freebies from pharma companies in recent raids

Our Bureau, New Delhi
Monday, August 8, 2022, 14:15 Hrs  [IST]

With the Income Tax Department closely watching the alleged tax violations and freebies offered by some of the pharma companies to the doctors, the National Medical Commission (NMC) has initiated efforts to collect the names of the registered medical practitioners who were involved in collection of these freebies.
According to reports, NMC’s ethics committee member Dr Yogender Malik has sent a letter to Central Board of Direct Taxes (CBDT) seeking the details of the doctors allegedly involved in taking freebies from a Bengaluru-based pharma company, whose premises were raided by the Income Tax Department last month.
The IT Department conducted search and seizure operations in the premises of a major Bengaluru-based pharmaceutical Group on July 6, 2022, and stated that the company has distributed freebies worth around Rs. 1,000 crore to medical professionals under the head “Sales and Promotion”. Reports are that the search was conducted at the premises of Micro Labs, which has seen sales of its pain relief drug Dolo 650 skyrocketing during the time of Covid-19 pandemic.
The NMC member has sought the CBDT to share the details of the medical practitioners who have allegedly received the freebies from the pharmaceutical company, since it is against the ethics of the professional conduct, etiquette and ethics of the medical practitioners.
The IT department, in July 13, said that it has carried out search and seizure operations on a major Bengaluru-based pharmaceutical group, engaged in the business of manufacturing and marketing of pharmaceutical products and active pharmaceutical ingredients (API). The group has presence in over 50 countries. The search action covered around 36 premises spread across nine states.
“During the course of the search operations, substantial incriminating evidence, in the form of documents and digital data, has been found and seized. The initial gleaning of the evidence has revealed that the group has been debiting in its books of account unallowable expenses on account of distribution of freebies to the medical professionals under the head “Sales and Promotion,” said the department.
“These freebies  included travel expenses, perquisites and gifts etc. to doctors and medical  professionals for promoting the group’s products under the heads “Promotion and Propaganda,” “Seminars and Symposiums”, “Medical Advisories” etc. The evidence indicates that the group has adopted unethical practices to promote its products/ brands. The quantum of such freebies detected is estimated to be around Rs. 1,000 crore,” it added.
The group is also found to have claimed artificially inflated deductions under special provisions in respect of certain incomes, by resorting to suppression of expenses and over-appropriation of revenue to the unit eligible for such deduction. Various other means of tax evasion, including inadequate allocation of research and development expenses to eligible units and inflated claim of weighted deduction under Section 35 (2AB), have also been detected. The quantum of tax sought to be evaded through such means is estimated at over Rs. 300 crore.
Instances of violation of provisions of tax deduction at source under Section 194C of the Income-tax Act, 1961 have also been detected in respect of transactions under contracts entered into with the third-party bulk drug manufacturers. During the search action, unaccounted cash amounting to Rs. 1.20 crore and unaccounted gold and diamond jewellery worth more than Rs. 1.40 crore have also been seized. Further investigations are in progress, said the IT department during the time.


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