MSME Certified Income Tax Live Batch to commence from 25th January 2022. Limited Seats. Register Now!!


Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Presumptive Income tax applicable for Collection Center of Pathology Lab?

This query is : Resolved 

17 October 2021 Hi Everyone
A client has taken a collection center of Pathkind Labs who provide pathology services. Collection center take blood samples and send it to testing lab of the company, it has employed a DMLT person for the same. Collection centers pays advance amount to Pathkind which reflects in virtual account of collection center in company's billing system. For every test entered only cost of the test is debited from virtual account. Collection center charges MRP of the test from customers. In 26AS the company shows MRP-COST as amount paid to the center and charges TDS on the same. TDS is recovered from virtual account every month.
Please help me with following queries.
1. Will income be considered in' the nature of commission or brokerage" hence it will be disqualified as business in Sec 44AD?
2. If yes then can the owner of collection center be considered as professional ( He doesn't have any professional qualification) in medical field and can file ITR in Sec 44ADA?
3. If No can the owner file ITR in presumptive income under Sec 44AD?
4. What should be the revenue for center amount MRP or MRP-cost?

I have searched this topic in forum and views of experts are contradictory.

Warm Regards

Kuldeep Saraswat

18 October 2021 Even though its just collection center, While invoices given as laboratory (per MRP). Sec. 44ADA not applicable.
Collection of charge are as for the test, but paying its cost to the center. Just a business center so sec. 44AD can be applied, if TDS be deducted u/s. 194C

Otherwise file ITR 3 with books of accounts.

For collection center revenue is MRP

19 October 2021 Dear Mr Rambhia
In 26AS tds deduction is under section 194JB.

20 October 2021 As the TDS deducted u/s. 194Jb, it will be difficult to convince department about the contract of collection of samples; though not impossible. So, better to avoid sec. 44AD.
Sec. 44ADA is not at all eligible.
Only possibility is to file ITR 3 under normal accounting criteria.

20 October 2021 Dear Mr Rambhia
The contract between the center and company is principal to principal basis. Role of center in contract is defined as below.
I. WHEREAS PDPL is engaged in providing the service of conducting and providing varied pathological tests and other testing or analysis for the purpose of determination of the nature of diseased condition, identification of a disease, or disorder in human beings to the highest standards.

II. AND WHEREAS the Client is having requisite experience in handling and running the business of an enthusiastic healthcare professional.

III. AND WHEREAS the Client represents that the phlebotomy services and/or other services by the Client shall be carried out under the mentoring/ monitoring of the designated pathologist of the nearest designated PDPL lab for the purposes of this Agreement.

IV. AND WHEREAS the Client has represented that it has the necessary rights/ permission/ approvals from the relevant authorities to run the Sample Collection Center with sufficient infrastructure, phlebotomists of requisite qualifications and experience for providing the technical testing and analysis services in relation to human beings, and has the right to enter into this Agreement.

V. AND WHEREAS relying on the representation made by the Client, PDPL agrees to avail service of the Client on the terms and conditions as mutually agreed.
VI. PDPL acknowledges that PDPL receives samples from various sample collection centers, doctors, clinics, hospitals and pathological laboratories who utilize the specialized services provided by PDPL. PDPL further acknowledges that Sample Collection Centre shall be rendering the services of drawing of samples of blood, urine, stool, saliva etc. from human body, processing and forwarding the samples for the testing at the PDPL laboratory network.
Isnt that makes collection center a business for44AD?

20 October 2021 Though some professionals have divergent views... but ...
Based on the qualities required by your client for the center, I would definitely go with sec. 44ADA with business code '18004'; provided it is run by either individual proprietor or any partnership firm having any qualified pathologist as a partner.
In this case Sec. 44AD will not be eligible.

08 November 2021 Sir the center is run by proprietor. They have employed a pathologist on salary basis for sample collection not as partner.

08 November 2021 Yes, as the service supplied is included u/s. 44AA(1), sec. 44ADA will be applicable.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Similar Resolved Queries