Tax for doctors and healthcare providers in India

Medicine is a specified profession, so an independent doctor uses Section 44ADA at 50% of receipts (up to Rs 75 lakh where cash is 5% or less), with no expense records. A consultant doctor (not an employee) has fees deducted under Section 194J at 10%, not salary TDS. Healthcare is GST-exempt under Entry 74, diagnosis, treatment and care by a clinical establishment, including the ambulance, with cosmetic and plastic surgery the main carve-out (taxable at 18% unless reconstructive). Individual health and life insurance premiums became nil-GST from 22 September 2025 (group cover stays 18%). Pharma freebies to doctors are taxable and caught by Section 194R.

Presumptive + GST + TDS at a glance

Presumptive taxation

Section:: Sec 44ADA (medical is a specified profession)
Deemed profit rate:: 50% of gross receipts
Classification:: profession

GST treatment

Slab:: 0%
SAC:: healthcare by clinical establishment / authorised practitioner exempt (Entry 74); cosmetic/plastic taxable 18%; individual health/life insurance premium nil-GST from 22 Sep 2025 (group 18%)
Composition eligible:: No
Reverse charge (RCM):: Not applicable

TDS exposure

Last reviewed: 29 May 2026

Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →

Medicine is a specified profession, so an independent doctor genuinely does use Section 44ADA at 50% of receipts, unlike most trades. Three features define the sector. A consultant doctor (not a salaried employee) has fees deducted under Section 194J at 10%, not as salary. Healthcare itself is GST-exempt under Entry 74, diagnosis, treatment and care by a clinical establishment or authorised practitioner, including patient ambulance transport, with cosmetic and plastic surgery the main carve-out (unless reconstructive). And since 22 September 2025, individual health and life insurance premiums are nil-GST (group and corporate cover stays at 18%). Pharma freebies to doctors are caught by Section 194R.

What business structure do doctors and healthcare providers use?

The common patterns for doctors and healthcare providers are: Sole proprietor / individual practitioner, the usual route for a doctor (44ADA available), Partnership or LLP, for a clinic or polyclinic, Private limited, for a hospital or larger healthcare business. The right structure depends on revenue, liability exposure, and personal circumstances, covered below.

Doctors use 44ADA, and consultant vs salary

Medicine is one of the professions specified under Section 44AA(1), so an independent doctor can declare 50% of gross receipts as income under Section 44ADA, with no expense substantiation, up to Rs 75 lakh where cash is 5% or less (otherwise Rs 50 lakh). The key classification is consultant versus employee: an independent consultant doctor is paid professional fees with 194J TDS at 10%, while a genuine salaried doctor is on payroll with salary TDS under Section 192. Get the substance right, a consultant arrangement that is really employment, or vice versa, is a scrutiny point.

A doctor (medicine being a specified profession) declares 50% under Section 44ADA; an independent consultant's fees attract 194J TDS at 10%, an employee's salary attracts 192. (Income-tax Act 1961 s.44ADA + s.44AA(1) (medical profession) (Income-tax Act 2025 s.58); s.194J (consultant fees) / s.192 (salary) (Income-tax Act 2025 s.393/392))

Healthcare is GST-exempt (with a cosmetic carve-out)

Healthcare services by a clinical establishment, an authorised medical practitioner or paramedics, diagnosis, treatment or care for illness, injury, deformity or pregnancy, plus patient ambulance transport, are exempt from GST under Entry 74. An inpatient composite supply (including medically necessary food and any fee the hospital retains for a senior consultant) is exempt. The main exception is cosmetic or plastic surgery, which is taxable at 18% unless it is reconstructive (after an accident, injury or congenital condition). Standalone room rent above a notified threshold can also be taxable. Separately, individual health and life insurance premiums became nil-GST from 22 September 2025, though group and corporate policies remain at 18%.

Healthcare by a clinical establishment or authorised practitioner is GST-exempt (Entry 74), including the ambulance; cosmetic/plastic surgery is 18% unless reconstructive; individual health/life insurance premiums are nil-GST from 22 September 2025. (CGST Act 2017 Notification 12/2017-CTR Entry 74 (healthcare exemption); Reform 2.0 (individual insurance premium nil from 22 September 2025))

Pharma freebies: Section 194R

Benefits and perquisites given to doctors by pharmaceutical companies, sponsored travel, hospitality, gifts or excess free samples, are caught by Section 194R, which requires the company to deduct 10% TDS on the value of such benefits over Rs 20,000 in a year. The Medical Council ethics code separately bans improper inducements, so the pharma company often cannot deduct the freebie as an expense, but the doctor is still taxable on its value. So a doctor receiving such benefits must treat them as taxable income, the 194R deduction is the mechanism that surfaces them.

Pharma benefits to doctors (travel, hospitality, gifts, excess samples) are taxable; under Section 194R the company deducts 10% TDS on benefits over Rs 20,000 in a year. (Income-tax Act 1961 s.194R (benefits in kind) (Income-tax Act 2025 s.393); NMC professional-conduct code (inducement ban))

Allowable expenses

Category	Examples	Tax treatment
Clinic premises	Chamber or clinic rent, electricity, reception	Deductible if keeping books; subsumed in the 50% deemed profit under 44ADA
Medical equipment	Diagnostic and clinic equipment, instruments	Deductible; in the 50% deemed profit under 44ADA
Staff	Nurses, assistants, receptionist	Deductible if keeping books
Professional costs	Council fees, indemnity insurance, CPD, journals	Deductible business expense
Admin	Phone, internet, accountant, software	Deductible (apportion personal use)

Vehicle and travel costs

A doctor making home or hospital visits can claim vehicle running costs under regular books, or rely on the 50% deemed profit under Section 44ADA, which is treated as inclusive of such costs.

Capital allowances and equipment

On regular books, clinic and diagnostic equipment depreciate (generally 15% WDV, computers 40%). Under Section 44ADA no separate depreciation is claimed. A hospital of 100 beds or more may have a legacy Section 35AD investment-linked deduction on qualifying capital expenditure.

Worked example

Dr Aisha — Hyderabad, TG

independent consultant physician (visiting two hospitals) (2026-27)

Annual professional receipts Rs 40 lakh, almost all by bank transfer. The hospitals deduct 194J TDS at 10% on her consultant fees. Modest expenses.

Medicine is a specified profession, so she uses Section 44ADA: deemed income 50% of Rs 40 lakh = Rs 20 lakh, no detailed books, within the Rs 75 lakh limit (cash under 5%). She files and reclaims the 194J TDS. Her clinical services are GST-exempt under Entry 74, so she charges no GST. If she received sponsored travel or gifts from a pharma company over Rs 20,000, the company would deduct 194R at 10% and she would declare the value as income.

Common audit triggers for doctors and healthcare providers

A consultant arrangement that is really employment (or vice versa), mismatching 194J and 192
Treating cosmetic or plastic surgery as GST-exempt (it is 18% unless reconstructive)
Not declaring the value of pharma freebies as income (194R)
Cash receipts over 5% of turnover while using the Rs 75 lakh 44ADA limit
Unrecorded cash patient collections (a known hospital-survey finding)
194J TDS in 26AS/AIS not reconciled with declared receipts

Frequently asked questions

Can a doctor use the 50% presumptive scheme?+

Yes. Medicine is one of the professions specified under Section 44AA(1), so an independent doctor genuinely uses Section 44ADA at 50% of gross receipts, with no expense substantiation, up to Rs 75 lakh where cash is 5% or less. This is one of the real 44ADA cases, unlike coaches or general trades, which are businesses on 44AD.

Is a consultant doctor paid under 194J or salary?+

An independent consultant doctor is paid professional fees with 194J TDS at 10%; a genuine salaried doctor is on payroll with salary TDS under Section 192. The classification follows the substance of the arrangement. A consultant who is really an employee (fixed hours, full control) or an employee dressed as a consultant is a scrutiny risk, so get the substance right.

Do doctors and hospitals charge GST?+

Generally no, on clinical services. Healthcare by a clinical establishment or authorised medical practitioner, diagnosis, treatment, care and patient ambulance transport, is GST-exempt under Entry 74. The main exception is cosmetic or plastic surgery, which is taxable at 18% unless it is reconstructive. So most of a doctor's or hospital's clinical work is GST-free, with cosmetic work the carve-out.

Are the gifts and trips pharma companies give doctors taxable?+

Yes. Sponsored travel, hospitality, gifts and excess free samples are benefits caught by Section 194R, under which the pharma company deducts 10% TDS on benefits over Rs 20,000 in a year, and the doctor declares the value as income. The Medical Council code also bans improper inducements, so the company often cannot deduct the cost, but the doctor is still taxed on the benefit.

Last reviewed: 29 May 2026