Tds on payment of professional fees through gift cards

The CBDT has issued circular No. 5/2012 [F. No. 225/142/2012-ITA.II], dated 1-8-2012. This instructs that freebies provided by pharmaceutical companies, diagnostic centers, and others in medical business to doctors is illegal (in popular terms - bribes) and not allowable in hands of provider but is taxable in hands of recipients as income.

As such no TDS is applicable over Gift, but AO may levy penalty if accounted as professional charges.