Dental Clinic tax implications for non destist

Hey Kevin! Great question — setting up a dental clinic with a non-dentist investor involves some important tax and structuring considerations. Here’s a quick breakdown for you:

1. Entity Options

You’re thinking of a partnership, which is common, but you could also consider:

• LLP (Limited Liability Partnership): Limited liability, flexibility, pass-through taxation.

• Private Limited Company: More compliance but separate legal entity, limited liability, easier to raise capital.

For a small clinic, partnership or LLP is usually simpler.

2. Tax Implications for Non-Dentist Partner (Investor)

• Share of Profit Taxation:
  As a partner, your share of the clinic’s profit will be taxed in your hands as business income under your personal income tax return.

• No Special Dentist Exemptions for You:
  The tax exemptions or benefits available to dentists (like presumptive schemes or certain deductions) typically relate to the professional income of the dentist only. Since you’re a non-medical investor, those may not apply to your share.

• Losses:
  You can set off your share of losses only against income from the same business (subject to partnership loss rules).

3. GST (Goods and Services Tax)

• Dental clinics are exempt from GST if they provide medical services by a qualified medical professional.

• Since you’re a non-dentist partner investing in infrastructure, make sure the clinic is primarily providing medical services by your dentist partner to claim exemption.

• Input Tax Credit (ITC) on equipment may not be available if the clinic is exempt; so careful consideration needed for GST on capital goods.

4. Investment & Running Costs

• Since you are funding infrastructure and running costs, keep clear records and formal agreements about capital contribution, profit-sharing ratio, and repayment if any.

• Any interest or returns paid to you (if structured as a loan) will have different tax implications than partnership profit.

5. Other Important Points

• Professional Tax & Licensing: Dentist partner should hold the required licenses and registrations.

• TDS (Tax Deducted at Source): On payments like rent, contractor payments, etc., as applicable.

• Books & Records: Maintain separate books for the clinic to clearly show income, expenses, partner’s share, etc.

Suggestion:

Before finalizing, discuss with a CA or tax consultant who can help draft a clear partnership deed covering profit sharing, tax treatment, and roles. Also, they can advise on the best entity type based on your long-term plans.